actual business plan definition

• 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 for May 2024 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

🎉 Celebrate Small Business Month:

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.

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

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 .

• Credit cards
• View all credit cards
• Banking guide
• Loans guide
• Insurance guide
• Personal finance
• View all personal finance
• Small business
• Small business guide
• View all taxes

You’re our first priority. Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners .

How to Write a Business Plan, Step by Step

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

ZenBusiness

A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

On a similar note...

Find small-business financing

Compare multiple lenders that fit your business

How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

Table of Contents

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

Featured Partners

ZenBusiness

$0 + State Fees

Varies By State & Package

On ZenBusiness' Website

On LegalZoom's Website

Northwest Registered Agent

$39 + State Fees

On Northwest Registered Agent's Website

Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

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 in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

• Best VPN Services
• Best Project Management Software
• Best Web Hosting Services
• Best Antivirus Software
• Best LLC Services
• Best POS Systems
• Best Business VOIP Services
• Best Credit Card Processing Companies
• Best CRM Software for Small Business
• Best Fleet Management Software
• Best Business Credit Cards
• Best Business Loans
• Best Business Software
• Best Business Apps
• Best Free Software For Business
• How to Start a Business
• How To Make A Small Business Website
• How To Trademark A Name
• What Is An LLC?
• How To Set Up An LLC In 7 Steps
• What is Project Management?

Not-For-Profit Vs. Nonprofit: What’s The Difference?

How To Develop an SEO Strategy in 2024

How To Make Money On Social Media in 2024

15 Ways to Advertise Your Business in 2024

What Is a Proxy Server?

How To Get A Business License In North Dakota (2024)

Julia is a writer in New York and started covering tech and business during the pandemic. She also covers books and the publishing industry.

Kelly Main is a Marketing Editor and Writer specializing in digital marketing, online advertising and web design and development. Before joining the team, she was a Content Producer at Fit Small Business where she served as an editor and strategist covering small business marketing content. She is a former Google Tech Entrepreneur and she holds an MSc in International Marketing from Edinburgh Napier University. Additionally, she is a Columnist at Inc. Magazine.

Lean Business Planning

Get what you want from your business.

Business Plan vs. Actual Means Management

Look at a simple example of how business plan vs. actual analysis works. Where do these numbers come from, and what do they mean? And, further on, how do you use them to manage better?

Here’s some simple vocabulary: In accounting and financial analysis, the difference between plan and actual is called variance . It’s a good word to know. Furthermore, you can have positive (good) or negative (bad) variance.

Positive Variance:

• It comes out as a positive number.
• If you sell more than planned, that’s good. If profits are higher than planned, that’s good too. So for sales and profits, variance is actual results less planned results (subtract plan from actual).
• For costs and expenses, spending less than planned is good, so positive variance means the actual amount is less than the planned amount. To calculate, subtract actual costs (or expenses) from planned costs.

Negative Variance:

• The opposite. When sales or profits are less than planned, that’s bad. You calculate variance on sales and profits by subtracting plan from actual.
• When costs or expenses are more than planned, that’s also bad. Once again, you subtract actual results from the planned results.

Sales Variance Example

I’d like to show you this with a simple example. Let’s start with a beginning sales plan, then look at variance, and explore what it means. In the illustration here you see sales, actual, and variance for bicycle unit sales for the month of March. You can see in this illustration that the plan was for 36, actual sales were 31, so the variance was -5. The plan for April was 40 units, actual sales were 42, so that’s a positive variance of 2.

Regarding units, in March the store sold five fewer bicycles than planned; and in April, it sold two more than planned. That’s a negative variance for March and positive for April. But wait – there’s more.

I use prices in this example to point out that plan vs. actual analysis offers a lot of good information. Look at the prices of bicycles for March, April, and May. You can see there was a price promotion going on in April, right? The price of bicycles went down. It was supposed to be $500 on average, but it ended up as $79 less than that. And the increased units over plan were not enough to compensate for the lower average price per unit. The value of April sales of bicycles ended up $2,318 less than planned. The store’s total sales for the month suffered, and ended up $3,633 less than planned.

This simple example shows why regular review and managing business plan vs. actual results is steering the company, and management. The variance analysis in this case leads to insight about price promotions. It might generate discussions about what went wrong. It might change some future decisions about price promotions. And of course it needs to generate some spending adjustments to compensate for the less-than-expected sales. The team has to work together, not looking to assign blame, but rather to gain insight and to adjust the business.

Expense Variance Example

The next illustration shows the expense variance for the same period, for the same bicycle store:

In this case, you can see that the actual marketing expenses were $326 less than planned, which is a positive variance, because an expense less than planned is a positive variance by definition. But is this good?

Analyzing the Marketing Expense Case

Here again, I want to show you the management implications of plan vs. actual. With the sales plan vs. actual we saw a sales promotion based on price. Apparently it failed, because the price attracted too few buyers to compensate the store for the discount.

But was the price the problem, or did somebody fail to execute on marketing? Is spending less than planned, during a promotion, a good thing? The prices came down but maybe the marketing department failed to tell people about it. Where is the management problem? What needs to be corrected? These are examples of good questions coming from plan vs. actual analysis.

Furthermore, let’s revisit the results with a look at what happened in May. In that month, the marketing expense was higher than planned, by $326. That’s a negative variance, an expense higher than planned. But another thing that happened in May – you can see it in the sales variance – was a price boost back to above plan, and sales revenue well above plan. So maybe that negative variance was actually good marketing, well executed.

So if you and I are running the bicycle store, we need more information. We need to look at results and talk about them with the team, to take advantage of what’s working, and correct what isn’t. And the variance analysis – plan vs. actual – provides the clues. Then it requires management to follow up and take action.

The Management in Business Plan Vs. Actual

What’s important is not the accounting, the calculations, but rather the resulting management. Garrett, the bike storeowner, watches the variance every month. He looks for indications of problems, or unexpected positives, so he can react. In this picture, the variance is negligible. The forecast was remarkably close to actual results. Still, Garrett should investigate why he’s selling fewer accessories and parts than planned, and whether the up and down of repair and service is worth reviewing. The point is the management. Lean business planning is about the management, not the hard numbers. What should be done, given the variance, to make the company better?

Share this:

Leave a comment cancel reply, discover more from lean business planning.

Subscribe now to keep reading and get access to the full archive.

Type your email…

Continue reading

• Case Studies
• Free Coaching Session

What is a Business Plan? And How Does it Benefit My Business?

Last Updated:  

March 22, 2024

Before you start up a business , or even before you make any major changes to your existing business, it's essential to have a solid plan in place. Your business plan will guide you through the critical early stages and help minimise mistakes - and if you're looking for investors, it could be the deciding factor that gets them on board with your idea.

While understanding the components and benefits of a business plan is crucial, creating one can be a daunting task, especially for new entrepreneurs. If you're unsure where to start or how to structure your plan effectively, consider seeking professional assistance from a business plan writing service . These services can provide expert guidance and support, ensuring that your business plan is not only comprehensive but also tailored to your specific business goals and needs.

But what exactly is a business plan? How do you write one? And how does it benefit your startup? In this article, we'll tackle all of those questions and more!

Key Takeaways on the Benefit of a B ‍ usiness Plans:

• Definition : A business plan is a written document that outlines your business's goals and the strategy to achieve them.
• Benefits : It serves as a roadmap, aids in securing funding, and assists in decision-making.
• Components : It typically includes sections like the executive summary, company description, market analysis, organisation and management, product line or services, marketing and sales strategy, and financial projections.
• Flexibility : Your business plan should be a flexible document that evolves with your business.
• Investor Attractio n: A well-structured plan can attract investors and other stakeholders.
• Strategic Planning : It helps to define your business strategy and establish a clear path for growth.
• Performance Monitoring : Regularly reviewing and updating your business plan allows for effective performance monitoring.

What is a business plan?

A business plan is a document that outlines your company's goals and objectives. It's a roadmap to help you achieve those goals, as well as a tool for making better decisions. A good business plan can help you attract investors, customers and other resources (like employees) by showing them what makes your company unique, and how it will grow in the future.

A well-written business plan should be clear enough for anyone from outside of your industry to understand, but detailed enough that it gives readers confidence in their investment or purchase decision.

Why do I need a business plan?

Your business plan is the roadmap that helps you achieve your goals. It's also a great tool for keeping track of your progress and clarifying where you need to focus your efforts in order to get results. As an entrepreneur, it's important to know what type of information should be included in your plan so you can create one that meets all of its needs.

Here are some benefits of having a well-written business plan:

• Helps secure funding (including loans)
• Provides direction for future growth and development
• Serves as an internal guide for employees who may not have been involved in developing the original document

How do I write a good business plan?

Writing a good business plan is not easy, but it's not impossible either. With several AI business plan generators available, you may create the first draft of your plan in no time. The most important thing is to make sure that your business plan is written in a clear and concise way.

The next step is to make sure that you address all the relevant information in your plan. As mentioned earlier, this includes:

• Your company's mission statement (your why)
• Your vision for the future of your company (what)
• A detailed description of how you will achieve this goal (how)

What does my business plan need to include?

Your business plan should include:

• Company description . This section should include the company's history, mission statement, and goals for the future. It should also include your background and experience in the industry.
• Market analysis . This section will analyse your target market and competitors, including any research you have done on them that's relevant to your business plan (such as demographic information). It will also include details about how much money it will take to get started with this venture, including startup costs such as equipment purchases or lease payments; operating expenses like utilities or payroll; expenses associated with marketing/promotion (printing flyers, paying for Google ads); etcetera...
• Product description & financial projections/requirements (or "Financials"). If applicable, and particularly if you're planning on launching a new product line, this part of your plan needs plenty of detail about what makes up each component of production costs so that investors can evaluate whether or not they'd like their money invested here vs elsewhere before committing funds up front!

A solid business plan will help you define and execute your startup's vision.

A solid business plan will help you define and execute your startup's vision. It's a roadmap to help you set goals, measure progress, and focus on what's most important to the success of your company.

A good plan also helps investors understand what they're investing in by providing a detailed description of how their money will be used to achieve certain results, and why those results are important for the company (and for them).

FAQs on Business Plans

Are you planning to start a business, or do you want to bring clarity to your existing operations? A business plan can be an indispensable tool to guide your path. This article outlines what a business plan is and the various ways it can benefit your business. For more specific queries, you can browse through our FAQ section.

How can a business plan benefit my business?

A business plan is a roadmap for your company. It helps you define your business goals, identify the resources you need to achieve those goals, and build a plan for achieving them. A well-written business plan will also help you make better decisions by providing a framework for evaluating opportunities and risks.

A good plan should include a mission statement - What's the purpose or mission of your company? Why does it exist? What does it do that makes it unique from other companies in its industry space (if applicable)? This section should be written in clear language that anyone could understand; think back to when we talked about defining what makes up a good elevator pitch earlier in this series!

What are the key components of a business plan?

A business plan is a detailed, written document that outlines the goals of your company and how you plan to achieve them. It's essentially a road map for your business, outlining what you want to accomplish in the short term (3-5 years) and long term (10+ years).

A good business plan will include all of these key components:

• Business summary - This section summarises who your company is, what industry you're in, what value proposition sets you apart from competitors, where customers come from and go through your sales funnel (e.g., website visitors turn into leads who become customers), etc. It should also include any existing marketing materials like brochures or infographics that explain how great it is working with clients using your services/products.
• Company overview - This section details everything about who owns/operates each department within the organisation, what their role is within those departments; whether they have any special skills needed for this particular job function; any certifications or licences necessary for performing these tasks at an efficient level without breaking laws along the way...etcetera ad nauseum! It may seem boring but trust me when I say this information helps potential investors understand exactly how much work needs done before they invest money into something (or someone).
• Market analysis - In order not only survive but thrive as an entrepreneur one must first understand what makes up "the competition" so one can better develop strategies around beating them head-on! This part explains why yours would be better than theirs by highlighting key differences between products offered by both sides; explaining why consumers choose one product over another based on price point alone.

How often should I update my business plan?

You should update your business plan at least annually, but more frequently if you are changing your business model or expanding it. It can also be beneficial to do so if you are adding or removing team members from the team (for example, if someone leaves). When updating a plan, consider which parts of it need adjusting based on changes in your industry and market conditions.

How can a business plan attract investors?

A business plan is a document that helps you determine your goals, market and customers. It's also a document that investors look at when deciding whether or not to invest in your company.

The best way to attract investors is by presenting them with an attractive and well thought out business plan.

How does a business plan help in strategic planning?

A business plan helps you to plan for the future of your business, which is essential when you are trying to attract investors or secure funding. A business plan is a written document that outlines the goals of your business, how you will achieve them and how you will measure your success.

A well-written and well-structured plan will help in strategic planning by providing:

• A clear vision and mission statement for your company
• An overview of the industry in which it operates along with its competitors' strengths and weaknesses
• An assessment of its strengths relative to those competitors' weaknesses

A business plan is an important tool for any entrepreneur, and it can help you to make better decisions. If you're just starting out with your own startup, then we recommend that you create a plan as soon as possible so that you know where your company is going in the future.

People Also Like to Read...

How Financial Planning Helps Startups Thrive: A Blueprint for Success

How To Build Your Digital Marketing Plan

What are the Main Reasons for Writing a Business Plan?

How to Write a Compelling Business Plan For Your Startup or Small Business

© 2016 - 2024 Robin Waite. All rights reserved.

24 of My Favorite Sample Business Plans & Examples For Your Inspiration

Published: February 06, 2024

I believe that reading sample business plans is essential when writing your own.

hbspt.cta._relativeUrls=true;hbspt.cta.load(53, 'e9d2eacb-6b01-423a-bf7a-19d42ba77eaa', {"useNewLoader":"true","region":"na1"});

As you explore business plan examples from real companies and brands, it’s easier for you to learn how to write a good one.

But what does a good business plan look like? And how do you write one that’s both viable and convincing. I’ll walk you through the ideal business plan format along with some examples to help you get started.

Table of Contents

Business Plan Format

Business plan types, sample business plan templates, top business plan examples.

Ask any successful sports coach how they win so many games, and they’ll tell you they have a unique plan for every single game. To me, the same logic applies to business.

If you want to build a thriving company that can pull ahead of the competition, you need to prepare for battle before breaking into a market.

Business plans guide you along the rocky journey of growing a company. And if your business plan is compelling enough, it can also convince investors to give you funding.

With so much at stake, I’m sure you’re wondering where to begin.

Free Business Plan Template

The essential document for starting a business -- custom built for your needs.

• Outline your idea.
• Pitch to investors.
• Secure funding.
• Get to work!

You're all set!

Click this link to access this resource at any time.

Fill out the form to get your free template.

First, you’ll want to nail down your formatting. Most business plans include the following sections.

1. Executive Summary

I’d say the executive summary is the most important section of the entire business plan. 

Why? Essentially, it's the overview or introduction, written in a way to grab readers' attention and guide them through the rest of the business plan. This is important, because a business plan can be dozens or hundreds of pages long.

There are two main elements I’d recommend including in your executive summary:

Company Description

This is the perfect space to highlight your company’s mission statement and goals, a brief overview of your history and leadership, and your top accomplishments as a business.

Tell potential investors who you are and why what you do matters. Naturally, they’re going to want to know who they’re getting into business with up front, and this is a great opportunity to showcase your impact.

Need some extra help firming up those business goals? Check out HubSpot Academy’s free course to help you set goals that matter — I’d highly recommend it

Products and Services

To piggyback off of the company description, be sure to incorporate an overview of your offerings. This doesn’t have to be extensive — just another chance to introduce your industry and overall purpose as a business.

In addition to the items above, I recommend including some information about your financial projections and competitive advantage here too.:

Keep in mind you'll cover many of these topics in more detail later on in the business plan. So, keep the executive summary clear and brief, and only include the most important takeaways.

Executive Summary Business Plan Examples

This example was created with HubSpot’s business plan template:

This executive summary is so good to me because it tells potential investors a short story while still covering all of the most important details.

Image Source

Tips for Writing Your Executive Summary

• Start with a strong introduction of your company, showcase your mission and impact, and outline the products and services you provide.
• Clearly define a problem, and explain how your product solves that problem, and show why the market needs your business.
• Be sure to highlight your value proposition, market opportunity, and growth potential.
• Keep it concise and support ideas with data.
• Customize your summary to your audience. For example, emphasize finances and return on investment for venture capitalists.

Check out our tips for writing an effective executive summary for more guidance.

2. Market Opportunity

This is where you'll detail the opportunity in the market.

The main question I’d ask myself here is this: Where is the gap in the current industry, and how will my product fill that gap?

More specifically, here’s what I’d include in this section:

• The size of the market
• Current or potential market share
• Trends in the industry and consumer behavior
• Where the gap is
• What caused the gap
• How you intend to fill it

To get a thorough understanding of the market opportunity, you'll want to conduct a TAM, SAM, and SOM analysis and perform market research on your industry.

You may also benefit from creating a SWOT analysis to get some of the insights for this section.

Market Opportunity Business Plan Example

I like this example because it uses critical data to underline the size of the potential market and what part of that market this service hopes to capture.

Tips for Writing Your Market Opportunity Section

• Focus on demand and potential for growth.
• Use market research, surveys, and industry trend data to support your market forecast and projections.
• Add a review of regulation shifts, tech advances, and consumer behavior changes.
• Refer to reliable sources.
• Showcase how your business can make the most of this opportunity.

3. Competitive Landscape

Since we’re already speaking of market share, you'll also need to create a section that shares details on who the top competitors are.

After all, your customers likely have more than one brand to choose from, and you'll want to understand exactly why they might choose one over another.

My favorite part of performing a competitive analysis is that it can help you uncover:

• Industry trends that other brands may not be utilizing
• Strengths in your competition that may be obstacles to handle
• Weaknesses in your competition that may help you develop selling points
• The unique proposition you bring to the market that may resonate with customers

Competitive Landscape Business Plan Example

I like how the competitive landscape section of this business plan below shows a clear outline of who the top competitors are.

It also highlights specific industry knowledge and the importance of location, which shows useful experience in this specific industry. 

This can help build trust in your ability to execute your business plan.

Tips for Writing Your Competitive Landscape

• Complete in-depth research, then emphasize your most important findings.
• Compare your unique selling proposition (USP) to your direct and indirect competitors.
• Show a clear and realistic plan for product and brand differentiation.
• Look for specific advantages and barriers in the competitive landscape. Then, highlight how that information could impact your business.
• Outline growth opportunities from a competitive perspective.
• Add customer feedback and insights to support your competitive analysis.

4. Target Audience

Use this section to describe who your customer segments are in detail. What is the demographic and psychographic information of your audience?

If your immediate answer is "everyone," you'll need to dig deeper. Here are some questions I’d ask myself here:

• What demographics will most likely need/buy your product or service?
• What are the psychographics of this audience? (Desires, triggering events, etc.)
• Why are your offerings valuable to them?

I’d also recommend building a buyer persona to get in the mindset of your ideal customers and be clear on why you're targeting them.

Target Audience Business Plan Example

I like the example below because it uses in-depth research to draw conclusions about audience priorities. It also analyzes how to create the right content for this audience.

Tips for Writing Your Target Audience Section

• Include details on the size and growth potential of your target audience.
• Figure out and refine the pain points for your target audience , then show why your product is a useful solution.
• Describe your targeted customer acquisition strategy in detail.
• Share anticipated challenges your business may face in acquiring customers and how you plan to address them.
• Add case studies, testimonials, and other data to support your target audience ideas.
• Remember to consider niche audiences and segments of your target audience in your business plan.

5. Marketing Strategy

Here, you'll discuss how you'll acquire new customers with your marketing strategy. I’d suggest including information:

• Your brand positioning vision and how you'll cultivate it
• The goal targets you aim to achieve
• The metrics you'll use to measure success
• The channels and distribution tactics you'll use

I think it’s helpful to have a marketing plan built out in advance to make this part of your business plan easier.

Marketing Strategy Business Plan Example

This business plan example includes the marketing strategy for the town of Gawler.

In my opinion, it really works because it offers a comprehensive picture of how they plan to use digital marketing to promote the community.

Tips for Writing Your Marketing Strategy

• Include a section about how you believe your brand vision will appeal to customers.
• Add the budget and resources you'll need to put your plan in place.
• Outline strategies for specific marketing segments.
• Connect strategies to earlier sections like target audience and competitive analysis.
• Review how your marketing strategy will scale with the growth of your business.
• Cover a range of channels and tactics to highlight your ability to adapt your plan in the face of change.

6. Key Features and Benefits

At some point in your business plan, you'll need to review the key features and benefits of your products and/or services.

Laying these out can give readers an idea of how you're positioning yourself in the market and the messaging you're likely to use. It can even help them gain better insight into your business model.

Key Features and Benefits Business Plan Example

In my opinion, the example below does a great job outlining products and services for this business, along with why these qualities will attract the audience.

Tips for Writing Your Key Features and Benefits

• Emphasize why and how your product or service offers value to customers.
• Use metrics and testimonials to support the ideas in this section.
• Talk about how your products and services have the potential to scale.
• Think about including a product roadmap.
• Focus on customer needs, and how the features and benefits you are sharing meet those needs.
• Offer proof of concept for your ideas, like case studies or pilot program feedback.
• Proofread this section carefully, and remove any jargon or complex language.

7. Pricing and Revenue

This is where you'll discuss your cost structure and various revenue streams. Your pricing strategy must be solid enough to turn a profit while staying competitive in the industry. 

For this reason, here’s what I’d might outline in this section:

• The specific pricing breakdowns per product or service
• Why your pricing is higher or lower than your competition's
• (If higher) Why customers would be willing to pay more
• (If lower) How you're able to offer your products or services at a lower cost
• When you expect to break even, what margins do you expect, etc?

Pricing and Revenue Business Plan Example

I like how this business plan example begins with an overview of the business revenue model, then shows proposed pricing for key products.

Tips for Writing Your Pricing and Revenue Section

• Get specific about your pricing strategy. Specifically, how you connect that strategy to customer needs and product value.
• If you are asking a premium price, share unique features or innovations that justify that price point.
• Show how you plan to communicate pricing to customers.
• Create an overview of every revenue stream for your business and how each stream adds to your business model as a whole.
• Share plans to develop new revenue streams in the future.
• Show how and whether pricing will vary by customer segment and how pricing aligns with marketing strategies.
• Restate your value proposition and explain how it aligns with your revenue model.

8. Financials

To me, this section is particularly informative for investors and leadership teams to figure out funding strategies, investment opportunities, and more.

 According to Forbes , you'll want to include three main things:

• Profit/Loss Statement - This answers the question of whether your business is currently profitable.
• Cash Flow Statement - This details exactly how much cash is incoming and outgoing to give insight into how much cash a business has on hand.
• Balance Sheet - This outlines assets, liabilities, and equity, which gives insight into how much a business is worth.

While some business plans might include more or less information, these are the key details I’d include in this section.

Financials Business Plan Example

This balance sheet is a great example of level of detail you’ll need to include in the financials section of your business plan.

Tips for Writing Your Financials Section

• Growth potential is important in this section too. Using your data, create a forecast of financial performance in the next three to five years.
• Include any data that supports your projections to assure investors of the credibility of your proposal.
• Add a break-even analysis to show that your business plan is financially practical. This information can also help you pivot quickly as your business grows.
• Consider adding a section that reviews potential risks and how sensitive your plan is to changes in the market.
• Triple-check all financial information in your plan for accuracy.
• Show how any proposed funding needs align with your plans for growth.

As you create your business plan, keep in mind that each of these sections will be formatted differently. Some may be in paragraph format, while others could be charts or graphs.

The formats above apply to most types of business plans. That said, the format and structure of your plan will vary by your goals for that plan. 

So, I’ve added a quick review of different business plan types. For a more detailed overview, check out this post .

1. Startups

Startup business plans are for proposing new business ideas.

If you’re planning to start a small business, preparing a business plan is crucial. The plan should include all the major factors of your business.

You can check out this guide for more detailed business plan inspiration .

2. Feasibility Studies

Feasibility business plans focus on that business's product or service. Feasibility plans are sometimes added to startup business plans. They can also be a new business plan for an already thriving organization.

3. Internal Use

You can use internal business plans to share goals, strategies, or performance updates with stakeholders. In my opinion, internal business plans are useful for alignment and building support for ambitious goals.

4. Strategic Initiatives

Another business plan that's often for sharing internally is a strategic business plan. This plan covers long-term business objectives that might not have been included in the startup business plan.

5. Business Acquisition or Repositioning

When a business is moving forward with an acquisition or repositioning, it may need extra structure and support. These types of business plans expand on a company's acquisition or repositioning strategy.

Growth sometimes just happens as a business continues operations. But more often, a business needs to create a structure with specific targets to meet set goals for expansion. This business plan type can help a business focus on short-term growth goals and align resources with those goals.

Now that you know what's included and how to format a business plan, let's review some of my favorite templates.

1. HubSpot's One-Page Business Plan

Download a free, editable one-page business plan template..

The business plan linked above was created here at HubSpot and is perfect for businesses of any size — no matter how many strategies we still have to develop.

Fields such as Company Description, Required Funding, and Implementation Timeline give this one-page business plan a framework for how to build your brand and what tasks to keep track of as you grow.

Then, as the business matures, you can expand on your original business plan with a new iteration of the above document.

Why I Like It

This one-page business plan is a fantastic choice for the new business owner who doesn’t have the time or resources to draft a full-blown business plan. It includes all the essential sections in an accessible, bullet-point-friendly format. That way, you can get the broad strokes down before honing in on the details.

2. HubSpot's Downloadable Business Plan Template

We also created a business plan template for entrepreneurs.

The template is designed as a guide and checklist for starting your own business. You’ll learn what to include in each section of your business plan and how to do it.

There’s also a list for you to check off when you finish each section of your business plan.

Strong game plans help coaches win games and help businesses rocket to the top of their industries. So if you dedicate the time and effort required to write a workable and convincing business plan, you’ll boost your chances of success and even dominance in your market.

This business plan kit is essential for the budding entrepreneur who needs a more extensive document to share with investors and other stakeholders.

It not only includes sections for your executive summary, product line, market analysis, marketing plan, and sales plan, but it also offers hands-on guidance for filling out those sections.

3. LiveFlow’s Financial Planning Template with built-in automation

This free template from LiveFlow aims to make it easy for businesses to create a financial plan and track their progress on a monthly basis.

The P&L Budget versus Actual format allows users to track their revenue, cost of sales, operating expenses, operating profit margin, net profit, and more.

The summary dashboard aggregates all of the data put into the financial plan sheet and will automatically update when changes are made.

Instead of wasting hours manually importing your data to your spreadsheet, LiveFlow can also help you to automatically connect your accounting and banking data directly to your spreadsheet, so your numbers are always up-to-date.

With the dashboard, you can view your runway, cash balance, burn rate, gross margins, and other metrics. Having a simple way to track everything in one place will make it easier to complete the financials section of your business plan.

This is a fantastic template to track performance and alignment internally and to create a dependable process for documenting financial information across the business. It’s highly versatile and beginner-friendly.

It’s especially useful if you don’t have an accountant on the team. (I always recommend you do, but for new businesses, having one might not be possible.)

4. ThoughtCo’s Sample Business Plan

One of the more financially oriented sample business plans in this list, BPlan’s free business plan template dedicates many of its pages to your business’s financial plan and financial statements.

After filling this business plan out, your company will truly understand its financial health and the steps you need to take to maintain or improve it.

I absolutely love this business plan template because of its ease-of-use and hands-on instructions (in addition to its finance-centric components). If you feel overwhelmed by the thought of writing an entire business plan, consider using this template to help you with the process.

6. Harvard Business Review’s "How to Write a Winning Business Plan"

Most sample business plans teach you what to include in your business plan, but this Harvard Business Review article will take your business plan to the next level — it teaches you the why and how behind writing a business plan.

With the guidance of Stanley Rich and Richard Gumpert, co-authors of " Business Plans That Win: Lessons From the MIT Enterprise Forum ", you'll learn how to write a convincing business plan that emphasizes the market demand for your product or service.

You’ll also learn the financial benefits investors can reap from putting money into your venture rather than trying to sell them on how great your product or service is.

This business plan guide focuses less on the individual parts of a business plan, and more on the overarching goal of writing one. For that reason, it’s one of my favorites to supplement any template you choose to use. Harvard Business Review’s guide is instrumental for both new and seasoned business owners.

7. HubSpot’s Complete Guide to Starting a Business

If you’re an entrepreneur, you know writing a business plan is one of the most challenging first steps to starting a business.

Fortunately, with HubSpot's comprehensive guide to starting a business, you'll learn how to map out all the details by understanding what to include in your business plan and why it’s important to include them. The guide also fleshes out an entire sample business plan for you.

If you need further guidance on starting a business, HubSpot's guide can teach you how to make your business legal, choose and register your business name, and fund your business. It will also give small business tax information and includes marketing, sales, and service tips.

This comprehensive guide will walk you through the process of starting a business, in addition to writing your business plan, with a high level of exactitude and detail. So if you’re in the midst of starting your business, this is an excellent guide for you.

It also offers other resources you might need, such as market analysis templates.

8. Panda Doc’s Free Business Plan Template

PandaDoc’s free business plan template is one of the more detailed and fleshed-out sample business plans on this list. It describes what you should include in each section, so you don't have to come up with everything from scratch.

Once you fill it out, you’ll fully understand your business’ nitty-gritty details and how all of its moving parts should work together to contribute to its success.

This template has two things I love: comprehensiveness and in-depth instructions. Plus, it’s synced with PandaDoc’s e-signature software so that you and other stakeholders can sign it with ease. For that reason, I especially love it for those starting a business with a partner or with a board of directors.

9. Small Business Administration Free Business Plan Template

The Small Business Administration (SBA) offers several free business plan templates that can be used to inspire your own plan.

Before you get started, you can decide what type of business plan you need — a traditional or lean start-up plan.

Then, you can review the format for both of those plans and view examples of what they might look like.

We love both of the SBA’s templates because of their versatility. You can choose between two options and use the existing content in the templates to flesh out your own plan. Plus, if needed, you can get a free business counselor to help you along the way.

I’ve compiled some completed business plan samples to help you get an idea of how to customize a plan for your business.

I chose different types of business plan ideas to expand your imagination. Some are extensive, while others are fairly simple.

Let’s take a look.

1. LiveFlow

One of the major business expenses is marketing. How you handle your marketing reflects your company’s revenue.

I included this business plan to show you how you can ensure your marketing team is aligned with your overall business plan to get results. The plan also shows you how to track even the smallest metrics of your campaigns, like ROI and payback periods instead of just focusing on big metrics like gross and revenue.

Fintech startup, LiveFlow, allows users to sync real-time data from its accounting services, payment platforms, and banks into custom reports. This eliminates the task of pulling reports together manually, saving teams time and helping automate workflows.

"Using this framework over a traditional marketing plan will help you set a profitable marketing strategy taking things like CAC, LTV, Payback period, and P&L into consideration," explains LiveFlow co-founder, Lasse Kalkar .

When it came to including marketing strategy in its business plan, LiveFlow created a separate marketing profit and loss statement (P&L) to track how well the company was doing with its marketing initiatives.

This is a great approach, allowing businesses to focus on where their marketing dollars are making the most impact. Having this information handy will enable you to build out your business plan’s marketing section with confidence. LiveFlow has shared the template here . You can test it for yourself.

2. Lula Body

Sometimes all you need is a solid mission statement and core values to guide you on how to go about everything. You do this by creating a business plan revolving around how to fulfill your statement best.

For example, Patagonia is an eco-friendly company, so their plan discusses how to make the best environmentally friendly products without causing harm.

A good mission statement  should not only resonate with consumers but should also serve as a core value compass for employees as well.

Patagonia has one of the most compelling mission statements I’ve seen:

"Together, let’s prioritise purpose over profit and protect this wondrous planet, our only home."

It reels you in from the start, and the environmentally friendly theme continues throughout the rest of the statement.

This mission goes on to explain that they are out to "Build the best product, cause no unnecessary harm, and use business to protect nature."

Their mission statement is compelling and detailed, with each section outlining how they will accomplish their goal.

4. Vesta Home Automation

This executive summary for a smart home device startup is part of a business plan created by students at Mount Royal University .

While it lacks some of the sleek visuals of the templates above, its executive summary does a great job of demonstrating how invested they are in the business.

Right away, they mention they’ve invested $200,000 into the company already, which shows investors they have skin in the game and aren’t just looking for someone else to foot the bill.

This is the kind of business plan you need when applying for business funds. It clearly illustrates the expected future of the company and how the business has been coming along over the years.

5. NALB Creative Center

This fictional business plan for an art supply store includes everything one might need in a business plan: an executive summary, a company summary, a list of services, a market analysis summary, and more.

One of its most notable sections is its market analysis summary, which includes an overview of the population growth in the business’ target geographical area, as well as a breakdown of the types of potential customers they expect to welcome at the store. 

This sort of granular insight is essential for understanding and communicating your business’s growth potential. Plus, it lays a strong foundation for creating relevant and useful buyer personas .

It’s essential to keep this information up-to-date as your market and target buyer changes. For that reason, you should carry out market research as often as possible to ensure that you’re targeting the correct audience and sharing accurate information with your investors.

Due to its comprehensiveness, it’s an excellent example to follow if you’re opening a brick-and-mortar store and need to get external funding to start your business .

6. Curriculum Companion Suites (CSS)

If you’re looking for a SaaS business plan example, look no further than this business plan for a fictional educational software company called Curriculum Companion Suites. 

Like the business plan for the NALB Creative Center, it includes plenty of information for prospective investors and other key stakeholders in the business.

One of the most notable features of this business plan is the executive summary, which includes an overview of the product, market, and mission.

The first two are essential for software companies because the product offering is so often at the forefront of the company’s strategy. Without that information being immediately available to investors and executives, then you risk writing an unfocused business plan.

It’s essential to front-load your company’s mission if it explains your "Why?" and this example does just that. In other words, why do you do what you do, and why should stakeholders care? This is an important section to include if you feel that your mission will drive interest in the business and its offerings.

7. Culina Sample Business Plan

Culina's sample business plan is an excellent example of how to lay out your business plan so that it flows naturally, engages readers, and provides the critical information investors and stakeholders need. 

You can use this template as a guide while you're gathering important information for your own business plan. You'll have a better understanding of the data and research you need to do since Culina’s plan outlines these details so flawlessly for inspiration.

8. Plum Sample Business Plan

Don't forget to share this post!

Related articles.

20 Free & Paid Small Business Tools for Any Budget

How to Write a Powerful Executive Summary [+4 Top Examples]

What is a Business Plan? Definition, Tips, and Templates

Maximizing Your Social Media Strategy: The Top Aggregator Tools to Use

The Content Aggregator Guide for 2023

7 Gantt Chart Examples You'll Want to Copy [+ 5 Steps to Make One]

The 8 Best Free Flowchart Templates [+ Examples]

16 Best Screen Recorders to Use for Collaboration

The 25 Best Google Chrome Extensions for SEO

Professional Invoice Design: 28 Samples & Templates to Inspire You

2 Essential Templates For Starting Your Business

Marketing software that helps you drive revenue, save time and resources, and measure and optimize your investments — all on one easy-to-use platform

How to Conduct a Plan Vs Actual Analysis With Spreadsheets

6 min. read

Updated March 18, 2024

I’ve spent decades working with plan v. actual in spreadsheets. I used plan vs. actual analysis once a month, comparing forecasts and budgets to actual results since I started Palo Alto Software back in the 1980s. Short of some extremely expensive budgeting software for corporations, that was the only way to do it.

For the record, this method still works. And nowadays you can get Microsoft Excel for about what a lunch costs per month, and Google Sheets — a competent alternative — for free. And there are other spreadsheets as well.

In this article, I’ll show you how to do your plan vs. actual analysis, step by step, with your accounting and your spreadsheet.

• Start with your spreadsheet

Try to think of budgets and forecasts in a horizontal layout showing categories in the leftmost column and months spreading to the right, one month per column, like this (showing only 3 months here because of space limitations)

If you scroll to the imaginary right on this cut-off spreadsheet, you scroll through 12 months and then a column summarizing for the whole year.

Spreadsheets are a programming language, not just an application. So you have the potential of infinite varieties.

Forecasting and budget math is usually simple

Don’t be put off by the look of a spreadsheet. It doesn’t take that much expertise. In the illustration above, the spreadsheet provides simple ways to calculate numbers using formulas. Cells are identified by rows and columns and calculations are normally fairly simple. For example, the math for new bicycles in the illustration above is units times price. As the next illustration shows, sales are located in cell D19 and the formula multiplies D20 (units) times D21 (price).

Categories matter

Make sure the way you organize the sales forecast in rows or items or groups matches the way your accounting (or bookkeeping) tracks them. It’s way easier to build a budget based on the categories in accounting. Rather than having to build a budget with different categories, and then convert and synchronize to compare your budget with actual results.

Match your chart of accounts, which is what accountants call your list of items that show up in your financial statements.

If the accounting divides sales into meals, drinks, and other, then the business plan should divide sales into meals, drinks, and other. So if your chart of accounts divides sales by product or service groups, keep those groups intact in your sales forecast . If bookkeeping tracks sales by product, don’t forecast your sales by channel instead.

If you’re planning for a startup business, coordinate the bookkeeping categories with the forecasting categories.

Get your last Income Statement (also called Profit & Loss) and keep it in view while you develop your future projections.

• If you don’t have more than 20 or so each rows of sales, costs, and expenses, then make the rows in the projected statement match the rows in the accounting.
• If your accounting summarizes categories for you – most systems do – consider using the summary categories in your business plan. Accounting needs detail, while planning needs a summary.

If your categories in the projections don’t match the accounting output, you’re not going to be able to track plan vs. actual well. It will take retyping and recalculating. And you’ll lose the most valuable business benefit of business planning: management, steering your company.

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

• Set the right scope

Are examples here show just the sales budget of the forecast. We recommend tracking and managing plan vs. actual for all of your business financials, including not just sales but the cost of sales, expenses, profit and loss, balance sheet, and cash flow . The same methodology applies.

Some items are more important than others. You do what you can to optimize management. Generally, where plan vs. actual analysis is most likely to help with management decisions are on sales, costs, and expenses.

• Putting your actual results into a spreadsheet

This next step is why you set your categories to match your accounting outputs. Most accounting or bookkeeping software can export actual results into spreadsheet format. From there, you can copy and paste actual data, from accounting reports, into spreadsheets set to match the exact structure of your spreadsheet. For example:

Be aware that with the spreadsheet method, getting actual results into the right spreadsheet structure — matching the plan or budget — can be tricky. It’s the most likely spot for errors. Throughout the process, double-check your inputs and your settings. There are ways to error-check spreadsheets that are beyond the scope of this article.

• Calculating the plan vs. actual (Variance)

The budget or plan is one spreadsheet and the actual results another. In most spreadsheets these might be separate sheets or tabs inside a single spreadsheet or workbook.

This next illustration shows the third spreadsheet, or sheet in a workbook, with the plan vs. actual results calculated.

Positive vs negative variance

In the illustration above you can see positive variance as positive numbers in black; and negative variance as negative numbers, in red.

Take the sales of bicycles for March, the first month shown. They sold fewer than planned, 31 instead of 36; so that’s a red number, -5 , a negative variance. But they sold them for a higher average price than planned, $615 instead of $500, so the average price is a positive variance, $115. I use that example to point out the management implications of plan vs. actual analysis. The negative variance on unit sales is bad by itself, but combined with the positive variance on average price, the sales for that month might be good news.

Variance is context sensitive

The actual variance calculation depends on the context:

• For sales, whether units, price, or total sales, more is better. Calculate the variance by subtracting the planned amount (36 units, in the example above) from the actual, (31 units). That way, less than planned calculates to a negative variance (31-36 = -5).
• For costs and expenses, less is better. Calculate the variance by subtracting the actual amount from the planned amount. So if the budget was $3,600 for an expense in a given month, and you spent only $3,100, then that’s a positive variance of $500. If the budget was $3,000, and you spent $3,500, then plan – actual is $3,000 – $3,500 = -$500 , a negative variance.

Your goal is effective management, not just accounting

Variance analysis is vital to good management. You have to track and follow up on budgets, mainly through variance analysis, or the budgets are useless.

Although variance analysis can be very complex, the main guide is common sense. In general, going under budget is a positive variance, and over budget is negative variance. But the real test of management should be whether or not the result was good for business.

In the examples here, I chose those numbers on purpose, to show the difference between simple accounting calculations (called variance) and the management implications of reviewing plan or budget results, comparing them to actual results, and looking at the difference. The bicycle store owner and the management team look at the numbers and then consider the impact on the business.

In the case shown here, maybe they want to adjust marketing messaging to encourage higher-priced items; or maybe they want to adjust the marketing messaging to bring in more people who want the lower-priced item.

That’s in the human decisions, not the numbers. The answer here is not in the numbers alone. It’s in the management that follows.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

Related Articles

7 Min. Read

How to Read and Analyze an Income Statement

6 Min. Read

How to Make Sense of Your Small Business Financial Statements

Turn What-if to What-Now: The Importance of Scenario Analysis

10 Min. Read

How Plan Vs Actual Comparison Helps You Manage Your Business

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

• Product overview
• All features
• App integrations

CAPABILITIES

• project icon Project management
• Project views
• Custom fields
• Status updates
• goal icon Goals and reporting
• Reporting dashboards
• workflow icon Workflows and automation
• portfolio icon Resource management
• Time tracking
• my-task icon Admin and security
• Admin console
• asana-intelligence icon Asana Intelligence
• list icon Personal
• premium icon Starter
• briefcase icon Advanced
• Goal management
• Organizational planning
• Campaign management
• Creative production
• Content calendars
• Marketing strategic planning
• Resource planning
• Project intake
• Product launches
• Employee onboarding
• View all uses arrow-right icon
• Project plans
• Team goals & objectives
• Team continuity
• Meeting agenda
• View all templates arrow-right icon
• Work management resources Discover best practices, watch webinars, get insights
• What's new Learn about the latest and greatest from Asana
• Customer stories See how the world's best organizations drive work innovation with Asana
• Help Center Get lots of tips, tricks, and advice to get the most from Asana
• Asana Academy Sign up for interactive courses and webinars to learn Asana
• Developers Learn more about building apps on the Asana platform
• Community programs Connect with and learn from Asana customers around the world
• Events Find out about upcoming events near you
• Partners Learn more about our partner programs
• Support Need help? Contact the Asana support team
• Asana for nonprofits Get more information on our nonprofit discount program, and apply.

Featured Reads

• Business strategy |
• What is strategic planning? A 5-step gu ...

What is strategic planning? A 5-step guide

Strategic planning is a process through which business leaders map out their vision for their organization’s growth and how they’re going to get there. In this article, we'll guide you through the strategic planning process, including why it's important, the benefits and best practices, and five steps to get you from beginning to end.

Strategic planning is a process through which business leaders map out their vision for their organization’s growth and how they’re going to get there. The strategic planning process informs your organization’s decisions, growth, and goals.

Strategic planning helps you clearly define your company’s long-term objectives—and maps how your short-term goals and work will help you achieve them. This, in turn, gives you a clear sense of where your organization is going and allows you to ensure your teams are working on projects that make the most impact. Think of it this way—if your goals and objectives are your destination on a map, your strategic plan is your navigation system.

In this article, we walk you through the 5-step strategic planning process and show you how to get started developing your own strategic plan.

How to build an organizational strategy

Get our free ebook and learn how to bridge the gap between mission, strategic goals, and work at your organization.

What is strategic planning?

Strategic planning is a business process that helps you define and share the direction your company will take in the next three to five years. During the strategic planning process, stakeholders review and define the organization’s mission and goals, conduct competitive assessments, and identify company goals and objectives. The product of the planning cycle is a strategic plan, which is shared throughout the company.

What is a strategic plan?

A strategic plan is the end result of the strategic planning process. At its most basic, it’s a tool used to define your organization’s goals and what actions you’ll take to achieve them.

Typically, your strategic plan should include: 

Your company’s mission statement

Your organizational goals, including your long-term goals and short-term, yearly objectives

Any plan of action, tactics, or approaches you plan to take to meet those goals

What are the benefits of strategic planning?

Strategic planning can help with goal setting and decision-making by allowing you to map out how your company will move toward your organization’s vision and mission statements in the next three to five years. Let’s circle back to our map metaphor. If you think of your company trajectory as a line on a map, a strategic plan can help you better quantify how you’ll get from point A (where you are now) to point B (where you want to be in a few years).

When you create and share a clear strategic plan with your team, you can:

Build a strong organizational culture by clearly defining and aligning on your organization’s mission, vision, and goals.

Align everyone around a shared purpose and ensure all departments and teams are working toward a common objective.

Proactively set objectives to help you get where you want to go and achieve desired outcomes.

Promote a long-term vision for your company rather than focusing primarily on short-term gains.

Ensure resources are allocated around the most high-impact priorities.

Define long-term goals and set shorter-term goals to support them.

Assess your current situation and identify any opportunities—or threats—allowing your organization to mitigate potential risks.

Create a proactive business culture that enables your organization to respond more swiftly to emerging market changes and opportunities.

What are the 5 steps in strategic planning?

The strategic planning process involves a structured methodology that guides the organization from vision to implementation. The strategic planning process starts with assembling a small, dedicated team of key strategic planners—typically five to 10 members—who will form the strategic planning, or management, committee. This team is responsible for gathering crucial information, guiding the development of the plan, and overseeing strategy execution.

Once you’ve established your management committee, you can get to work on the planning process. 

Step 1: Assess your current business strategy and business environment

Before you can define where you’re going, you first need to define where you are. Understanding the external environment, including market trends and competitive landscape, is crucial in the initial assessment phase of strategic planning.

To do this, your management committee should collect a variety of information from additional stakeholders, like employees and customers. In particular, plan to gather:

Relevant industry and market data to inform any market opportunities, as well as any potential upcoming threats in the near future.

Customer insights to understand what your customers want from your company—like product improvements or additional services.

Employee feedback that needs to be addressed—whether about the product, business practices, or the day-to-day company culture.

Consider different types of strategic planning tools and analytical techniques to gather this information, such as:

A balanced scorecard to help you evaluate four major elements of a business: learning and growth, business processes, customer satisfaction, and financial performance.

A SWOT analysis to help you assess both current and future potential for the business (you’ll return to this analysis periodically during the strategic planning process). 

To fill out each letter in the SWOT acronym, your management committee will answer a series of questions:

What does your organization currently do well?

What separates you from your competitors?

What are your most valuable internal resources?

What tangible assets do you have?

What is your biggest strength? 

Weaknesses:

What does your organization do poorly?

What do you currently lack (whether that’s a product, resource, or process)?

What do your competitors do better than you?

What, if any, limitations are holding your organization back?

What processes or products need improvement? 

Opportunities:

What opportunities does your organization have?

How can you leverage your unique company strengths?

Are there any trends that you can take advantage of?

How can you capitalize on marketing or press opportunities?

Is there an emerging need for your product or service? 

What emerging competitors should you keep an eye on?

Are there any weaknesses that expose your organization to risk?

Have you or could you experience negative press that could reduce market share?

Is there a chance of changing customer attitudes towards your company? 

Step 2: Identify your company’s goals and objectives

To begin strategy development, take into account your current position, which is where you are now. Then, draw inspiration from your vision, mission, and current position to identify and define your goals—these are your final destination. 

To develop your strategy, you’re essentially pulling out your compass and asking, “Where are we going next?” “What’s the ideal future state of this company?” This can help you figure out which path you need to take to get there.

During this phase of the planning process, take inspiration from important company documents, such as:

Your mission statement, to understand how you can continue moving towards your organization’s core purpose.

Your vision statement, to clarify how your strategic plan fits into your long-term vision.

Your company values, to guide you towards what matters most towards your company.

Your competitive advantages, to understand what unique benefit you offer to the market.

Your long-term goals, to track where you want to be in five or 10 years.

Your financial forecast and projection, to understand where you expect your financials to be in the next three years, what your expected cash flow is, and what new opportunities you will likely be able to invest in.

Step 3: Develop your strategic plan and determine performance metrics

Now that you understand where you are and where you want to go, it’s time to put pen to paper. Take your current business position and strategy into account, as well as your organization’s goals and objectives, and build out a strategic plan for the next three to five years. Keep in mind that even though you’re creating a long-term plan, parts of your plan should be created or revisited as the quarters and years go on.

As you build your strategic plan, you should define:

Company priorities for the next three to five years, based on your SWOT analysis and strategy.

Yearly objectives for the first year. You don’t need to define your objectives for every year of the strategic plan. As the years go on, create new yearly objectives that connect back to your overall strategic goals . 

Related key results and KPIs. Some of these should be set by the management committee, and some should be set by specific teams that are closer to the work. Make sure your key results and KPIs are measurable and actionable. These KPIs will help you track progress and ensure you’re moving in the right direction.

Budget for the next year or few years. This should be based on your financial forecast as well as your direction. Do you need to spend aggressively to develop your product? Build your team? Make a dent with marketing? Clarify your most important initiatives and how you’ll budget for those.

A high-level project roadmap . A project roadmap is a tool in project management that helps you visualize the timeline of a complex initiative, but you can also create a very high-level project roadmap for your strategic plan. Outline what you expect to be working on in certain quarters or years to make the plan more actionable and understandable.

Step 4: Implement and share your plan

Now it’s time to put your plan into action. Strategy implementation involves clear communication across your entire organization to make sure everyone knows their responsibilities and how to measure the plan’s success. 

Make sure your team (especially senior leadership) has access to the strategic plan, so they can understand how their work contributes to company priorities and the overall strategy map. We recommend sharing your plan in the same tool you use to manage and track work, so you can more easily connect high-level objectives to daily work. If you don’t already, consider using a work management platform .  

A few tips to make sure your plan will be executed without a hitch: 

Communicate clearly to your entire organization throughout the implementation process, to ensure all team members understand the strategic plan and how to implement it effectively. 

Define what “success” looks like by mapping your strategic plan to key performance indicators.

Ensure that the actions outlined in the strategic plan are integrated into the daily operations of the organization, so that every team member's daily activities are aligned with the broader strategic objectives.

Utilize tools and software—like a work management platform—that can aid in implementing and tracking the progress of your plan.

Regularly monitor and share the progress of the strategic plan with the entire organization, to keep everyone informed and reinforce the importance of the plan.

Establish regular check-ins to monitor the progress of your strategic plan and make adjustments as needed. 

Step 5: Revise and restructure as needed

Once you’ve created and implemented your new strategic framework, the final step of the planning process is to monitor and manage your plan.

Remember, your strategic plan isn’t set in stone. You’ll need to revisit and update the plan if your company changes directions or makes new investments. As new market opportunities and threats come up, you’ll likely want to tweak your strategic plan. Make sure to review your plan regularly—meaning quarterly and annually—to ensure it’s still aligned with your organization’s vision and goals.

Keep in mind that your plan won’t last forever, even if you do update it frequently. A successful strategic plan evolves with your company’s long-term goals. When you’ve achieved most of your strategic goals, or if your strategy has evolved significantly since you first made your plan, it might be time to create a new one.

Build a smarter strategic plan with a work management platform

To turn your company strategy into a plan—and ultimately, impact—make sure you’re proactively connecting company objectives to daily work. When you can clarify this connection, you’re giving your team members the context they need to get their best work done. 

A work management platform plays a pivotal role in this process. It acts as a central hub for your strategic plan, ensuring that every task and project is directly tied to your broader company goals. This alignment is crucial for visibility and coordination, allowing team members to see how their individual efforts contribute to the company’s success. 

By leveraging such a platform, you not only streamline workflow and enhance team productivity but also align every action with your strategic objectives—allowing teams to drive greater impact and helping your company move toward goals more effectively. 

Strategic planning FAQs

Still have questions about strategic planning? We have answers.

Why do I need a strategic plan?

A strategic plan is one of many tools you can use to plan and hit your goals. It helps map out strategic objectives and growth metrics that will help your company be successful.

When should I create a strategic plan?

You should aim to create a strategic plan every three to five years, depending on your organization’s growth speed.

Since the point of a strategic plan is to map out your long-term goals and how you’ll get there, you should create a strategic plan when you’ve met most or all of them. You should also create a strategic plan any time you’re going to make a large pivot in your organization’s mission or enter new markets. 

What is a strategic planning template?

A strategic planning template is a tool organizations can use to map out their strategic plan and track progress. Typically, a strategic planning template houses all the components needed to build out a strategic plan, including your company’s vision and mission statements, information from any competitive analyses or SWOT assessments, and relevant KPIs.

What’s the difference between a strategic plan vs. business plan?

A business plan can help you document your strategy as you’re getting started so every team member is on the same page about your core business priorities and goals. This tool can help you document and share your strategy with key investors or stakeholders as you get your business up and running.

You should create a business plan when you’re: 

Just starting your business

Significantly restructuring your business

If your business is already established, you should create a strategic plan instead of a business plan. Even if you’re working at a relatively young company, your strategic plan can build on your business plan to help you move in the right direction. During the strategic planning process, you’ll draw from a lot of the fundamental business elements you built early on to establish your strategy for the next three to five years.

What’s the difference between a strategic plan vs. mission and vision statements?

Your strategic plan, mission statement, and vision statements are all closely connected. In fact, during the strategic planning process, you will take inspiration from your mission and vision statements in order to build out your strategic plan.

Simply put: 

A mission statement summarizes your company’s purpose.

A vision statement broadly explains how you’ll reach your company’s purpose.

A strategic plan pulls in inspiration from your mission and vision statements and outlines what actions you’re going to take to move in the right direction. 

For example, if your company produces pet safety equipment, here’s how your mission statement, vision statement, and strategic plan might shake out:

Mission statement: “To ensure the safety of the world’s animals.” 

Vision statement: “To create pet safety and tracking products that are effortless to use.” 

Your strategic plan would outline the steps you’re going to take in the next few years to bring your company closer to your mission and vision. For example, you develop a new pet tracking smart collar or improve the microchipping experience for pet owners. 

What’s the difference between a strategic plan vs. company objectives?

Company objectives are broad goals. You should set these on a yearly or quarterly basis (if your organization moves quickly). These objectives give your team a clear sense of what you intend to accomplish for a set period of time. 

Your strategic plan is more forward-thinking than your company goals, and it should cover more than one year of work. Think of it this way: your company objectives will move the needle towards your overall strategy—but your strategic plan should be bigger than company objectives because it spans multiple years.

What’s the difference between a strategic plan vs. a business case?

A business case is a document to help you pitch a significant investment or initiative for your company. When you create a business case, you’re outlining why this investment is a good idea, and how this large-scale project will positively impact the business. 

You might end up building business cases for things on your strategic plan’s roadmap—but your strategic plan should be bigger than that. This tool should encompass multiple years of your roadmap, across your entire company—not just one initiative.

What’s the difference between a strategic plan vs. a project plan?

A strategic plan is a company-wide, multi-year plan of what you want to accomplish in the next three to five years and how you plan to accomplish that. A project plan, on the other hand, outlines how you’re going to accomplish a specific project. This project could be one of many initiatives that contribute to a specific company objective which, in turn, is one of many objectives that contribute to your strategic plan. 

What’s the difference between strategic management vs. strategic planning?

A strategic plan is a tool to define where your organization wants to go and what actions you need to take to achieve those goals. Strategic planning is the process of creating a plan in order to hit your strategic objectives.

Strategic management includes the strategic planning process, but also goes beyond it. In addition to planning how you will achieve your big-picture goals, strategic management also helps you organize your resources and figure out the best action plans for success. 

Related resources

What is management by objectives (MBO)?

Write better AI prompts: A 4-sentence framework

What is content marketing? A complete guide

How to find alignment on AI

Actuals in Accounting: Definition, How It Works and Examples

It should surprise no one that “actuals” are what really matters in business. They are the numbers reported in financial statements, tax returns and compliance documents. But when managers talk about actuals, they’re usually referring to the role they play in business analyses. Businesses need to plan, so they produce budgets and forecasts against which actual results are later compared and analyzed, improving managers’ ability to understand what is going wrong or right with the business. Further, to paint the most accurate possible financial picture of the business at any point in time, accountants cannot always wait for expected transactions to occur before recording the activity they represent. So, accountants make estimates, accruals and deferrals that must later be “trued-up” with actual results.

For all these reasons, recognizing actual revenue and costs is an essential part of accounting for any business. Using actuals to measure the accuracy of budgets, revise forecasts and bring expectations into line with current operational or market realities can help a company analyze and adjust targets for sales, production or other parts of the business. Accounting and financial planning departments use actuals to refine estimates of business costs. Variances revealed when actuals are compared to prior estimates are used to predict a business’s profitability and performance. And reconciling actual revenue and costs against what had been anticipated can help businesses continuously monitor cash flows, set benchmarks and define goals.

What Are Actuals in Accounting?

The accounting definition of actuals is just that: the amount of money that was actually received from a customer or paid for something purchased by a business. For small businesses that use cash-basis accounting, actuals are the only thing they ever record; for them, analyzing the differences between their actuals and their budgets and forecasts are the only use of actuals. When contrasted with estimates, actuals depict the business’s current financial position in a way that enables management to see what really happened versus what was expected. The larger the variance, the bigger the signal to dive in and make operational changes, as opposed to staying the course.

Most companies, however, use accrual-basis accounting. For them, variance analysis is just as important as it is for cash-basis companies, and in the same ways. But accrual-basis accounting requires these companies to put estimates in their books at the moment revenue is earned or expenses are incurred, as placeholders for the future transaction in which that revenue is actually received or the expense is actually paid. When that occurs, additional accounting entries true-up the books, replacing the placeholders with the actuals.

Key Takeaways

• Actuals in accounting are the real payments and revenue that are paid out or collected by a business.
• Companies compare actuals against forecasts and budgets to inform key decisions about the efficiency, sustainability and profitability of their operations.
• Using actuals as part of a monthly variance analysis enables stakeholders to identify risks to the business or to make changes in operations that help consistently refine data inputs and improve predictions.
• Actuals are what actually matters: They are the values reported in financial statements, tax filings and other compliance documents. So, it’s important to get them right.

Actuals in Accounting Explained

Tracking actual amounts for both revenue and expense is an essential basic accounting task for any business. Monitoring actuals helps inform a variety of business decisions, such as sourcing, production, labor and pricing. For example, supply chain disruptions may lead to higher costs than expected for raw materials, resulting in a negative variance in product profit. To adjust for this cost, a company may decide to pass the increase on to its customers by raising prices or adjust its forecasts to reflect lower profitability in the future.

Companies use actuals to:

• Adjust budgets going forward by comparing actuals against expectations.
• Identify significant revenue or expense gaps and quickly make changes, if needed.
• Analyze expenses and revenues and revise estimates to improve forecasting accuracy.
• Report to stakeholders and pay taxes.

How Do Actuals Work?

Actuals work by informing company managers about what’s really happening at the transactional level of their business. The actuals associated with transactions — the receipt of money from a customer or payment of a bill to a supplier — are recorded at the time the payment is sent or the revenue is received. This impacts cash-basis and accrual-basis companies differently. The reason is that the exchange of money for goods and services does not always happen at the time a service is rendered or the goods are acquired. In such situations, a company using accrual accounting requires its bookkeepers to record estimates using accruals or deferrals. These estimates are later “reversed” when the actuals occur, using journal entries that essentially cancel the estimates, replace them with the actuals and leave only the actuals on the books.

The process of accruals, deferrals and reversals (when actuals are recorded) is necessary to the matching and revenue recognition principles inherent in U.S. Generally Accepted Accounting Principles (GAAP). The matching principle requires that expenses be recognized in the same period as the revenue they help generate. The revenue recognition principle requires that revenue be recognized when it is earned — in other words, when a business performs the actions that entitle it to the revenue. For example, suppose an accrual-basis company earns $1,000 in revenue from a customer in March and, therefore, recognizes it as first-quarter revenue. But the customer pays the $1,000 invoice in April. When the company records the actual April payment to its cash account, it also makes a corresponding negative entry of $1,000 against its accounts receivable account. Thus, the net effect on the company’s books in April is zero ($1,000 – $1,000), leaving only the $1,000 in revenue originally recognized in March, the month in which it was earned.

It’s important to know that variances in anticipated costs or sales amounts can and do occur. Analyzing a comparison of accruals and actuals can help a business understand its cash inflows and outflows and identify how the business is performing, compared to its plan, at any given point in time. For example, a portion of a parts order may no longer be available, making the supplier’s invoice lower than expected, or a customer emergency may mean a technician’s travel expense becomes higher than planned. In these cases, the variances would be analyzed to determine how business and strategic decisions could be impacted going forward. Capturing project actuals accurately , and in a timely manner, is essential, and doing a deep dive into circumstances can inform future plans.

Actuals vs. Budget

A comparison of actual costs to a company’s budget is called variance analysis. Accounting and financial planning and analysis (FP&A) departments use actuals during their variance analyses to continuously evaluate the performance of the business and interpret the company’s results. Comparing actual revenue and expenses to the original plan or project proposal can reveal shifts in sales or production; management can then determine whether course correction is needed. It can also be a heads-up that a business is on the verge of overspending. These types of analyses may be referred to as “ Budget vs. Actual” or “Forecast vs. Actual” analyses.

Actuals are also useful as part of a rolling forecast. For example, a 12-month forecast might be prepared at the beginning of the calendar year. As each month’s expenses and revenue actually happen, the forecast for that month is replaced by the actuals. Management may decide to review the full-year forecast at the end of March, evaluating the three months of actuals vis-à-vis the original forecast for those months, along with the plans for the nine months left in the forecast. If the actuals are trending above or below the forecast, managers may decide to make corresponding operational changes or choose to stay the course. Companies use actuals reports to constantly monitor current conditions and revise forecasts that were based on historical and other data, and they use variance analyses as the place to start a conversation about what is going right or wrong with the business. Variance analyses can also help identify inadvertent mistakes or uncover potential fraud and irregularities in financials or operations.

How to Read a Budget vs. Actuals Report

Reading a budget vs. actuals report is an essential skill for decision-makers trying to evaluate the position of their business against their original plans. Ideally run monthly, this variance analysis typically adheres to a standard set of inputs, which track actuals; the analysis then calculates the variance between the actuals and the budget in terms of dollars and percentages, helping senior managers easily detect emerging positive or negative trends. Budget vs. actual reports commonly start on the left with columns for actual and budgeted amounts, then show the difference between the two, as represented in dollar value and percent of budget.

In the simplified fictional report shown below, sales for ABC Company were expected to bring in $4,000 for its new product and require $3,500 in expenses. Actual sales of $5,000 were recorded, along with higher expenses of $4,200. The budget vs. actual report reflects both the $1,000 by which sales exceeded the budgeted amount and the $700 increase in expenses. Because the increase in sales value was greater than the positive variance in expenses, profit rose, too.

ABC Co. Budget vs. Actuals Report

It is typical to reflect positive variances without parentheses and negative variances either with a minus before the number or in parentheses. It’s important to understand that not all positive variances are favorable for a business, just as all negative variances aren’t necessarily unfavorable. Context is always important, because a positive variance may be caused by an unfavorable business situation and vice versa. For example, the positive variance in the expense line for ABC Company, compared to its budgeted expenses, might be considered unfavorable at first — until the analyst learns it is actually due to increased sales and results in higher profits. FP&A professionals use the budget vs. actuals report to dig deeper into the factors that might have caused the variances, and they communicate their findings with senior management so that action can be taken, if needed.

Actuals vs. Accruals

While actuals can be described as the money received for sales or the cash paid for expenses, accruals are a bookkeeping placeholder to recognize revenue earned or expenses incurred in the correct fiscal period, regardless of when the cash payments are made. Expense accruals generally occur when services are rendered but not yet paid for, or when supplies are purchased on credit.

For example, a business may receive office supplies in January but not pay the bill until the invoice arrives the following month. Under accrual-basis accounting, the expense is recorded as occurring in January, even though the payment will not be made until February. Similarly, a business may record sales orders fulfilled in March but purchased on credit, so they won’t be billed for and collected until May. Replacing accruals with actuals in the month the monies are actually received requires a reversal of journal entries.

Accrual-basis accounting is the only method of accounting that is GAAP-compliant, and it is a necessity for public companies and those that seek bank loans. It’s more complicated and labor-intensive than cash-basis accounting, potentially increasing the risk of mistakes. Creating accurate financial reports , preferably through an automated process, will improve the overall quality of a business’s accounting data, improve efficiency and, if something looks amiss, highlight issues more quickly.

Comparing Accruals vs. Actuals

Actuals examples.

Actuals are the real expenses incurred or revenues received in the operation of a business. Unlike estimates, actuals provide a true picture of costs and income.

Here’s an example. A clothing company may estimate that replacing a large stitching machine will cost $2,200, but the actual cost ends up being $3,400 due to unanticipated special wiring that was required. The business could not have estimated the actual cost until the expenses were incurred during the installation, and it will now see a negative, or unfavorable, variance when compared to the budgeted expenses for that period.

On the revenue side, an auto parts store may estimate selling 20,000 snow scrapers in March, based on last year’s figures. However, several late season storms result in the sale of 40,000 units. The business will see a positive, or favorable, variance from the forecasted revenue for that month.

In both examples, the tracking of actuals to budget will prompt questions about what caused the variances. Minor variances are to be expected, but a major difference should be looked at more closely by business leaders. Once the cause of the sales or spending variance is determined, forecasts can be modified and/or corrective actions taken to reduce the size of the gap in the future.

#1 Cloud Accounting Software

Increase Accounting Accuracy and Close With Confidence Using NetSuite

Capturing actuals as part of a company’s accounting operations is essential for accurate reporting and analysis of business operations. Automating this process using NetSuite Cloud Accounting not only improves the timeliness and accuracy of capturing expenses and revenue, but it also speeds time to analysis by creating a central repository of transactional data. Using real-time dashboards, accounting and FP&A departments can access variance analyses without even waiting for period closes. NetSuite accounting lets you generate reports at any time to help identify the business’s performance gaps.

Tracking actual expenses and revenue is a critical accounting practice that helps companies grasp the true impact of running their business. When matched against forecasted budgets, actuals help business leaders gain the data they need to make informed decisions about their business’s performance, while providing cash flow visibility. Analyzing the differences between budgeted and actual expenses and revenue allows stakeholders to make informed decisions about when to revise forecasts, how to improve efficiency and predict profitability and, if needed, find ways to resolve problematic issues swiftly.

Get the Business Insight You Need Today

Actuals in Accounting FAQs

What types of variances can you analyze in a budget vs. actual report?

Variances between budgeted and actual revenue/expenses are quickly identifiable in a budget vs. actual report. At the highest level, managers should be examining variances in revenue and spending as compared to budget estimates. Key components of a business, such as revenue trends, materials costs, labor or an unexpected or one-time purchase, could all cause variances that might require operational adjustments or a revised forecast. In a larger sense, any line item in a business budget can be analyzed in a budget vs. actual report.

What is actualization in finance?

Actualization is the method of overwriting closed accounting periods or revising forecasts with actual asset, liability, equity, revenues and expenses. Variances provide insights into business operations when directly compared to budgets or forecasts.

What are monthly actuals?

Monthly actuals are the realized expenses or revenues for a given month. As part of a variance analysis, monthly actuals highlight the difference between a benchmark, such as a budget or forecast, and actual spending or receipts. Monthly reviews can pinpoint actionable financial issues before they turn into larger problems.

What does actual mean in economics ?

In economics, “actual” means current levels of output, compared to estimated or potential output of a given economy. Similar to variance analysis in accounting, economists look at the difference between potential output and actual output to see how resources are being utilized and whether an economy is operating at its full potential. The difference is called an output gap.

What are actuals in data?

Actuals in data are the inputs that reflect the real expenditures or revenues a company realized. Actuals are the transaction data used to compare against estimates as part of a budget or forecasting process. Having strong, historical financial data improves the accuracy of future budgets.

Financial Forecast: Definition, How to Create, & Benefits

Without a financial forecast, as a business leader you’ll have a hard time gaining funding and essentially be navigating without a compass…

More On This

Trending Articles

Learn How NetSuite Can Streamline Your Business

NetSuite has packaged the experience gained from tens of thousands of worldwide deployments over two decades into a set of leading practices that pave a clear path to success and are proven to deliver rapid business value. With NetSuite, you go live in a predictable timeframe — smart, stepped implementations begin with sales and span the entire customer lifecycle, so there’s continuity from sales to services to support.

Before you go...

Discover the products that 37,000+ customers depend on to fuel their growth.

Before you go. Talk with our team or check out these resources.

Want to set up a chat later? Let us do the lifting.

NetSuite ERP

Explore what NetSuite ERP can do for you.

Business Guide

Complete Guide to Cloud ERP Implementation