nature of business example in business plan

• Corporations
• Definitions

Nature of Business (What It Is And What You Must Know)

What is the Nature of Business ?

How do you legally define it?

What are the essential elements you should know!

In this article, we will break down the Nature of Business meaning so you know all there is to know about it!

Keep reading as we have gathered exactly the information that you need!

Let’s dig into our business terms knowledge!

Are you ready?

Let’s get started!

Table of Contents

What is Nature of Business

The nature of business is a phrase referring to the overall purpose and existence of a company within a market sector or industry.

When we say nature of a business, we are alluding to:

• What type of products and services are sold by a company
• The industry in which the company operations
• Its overall mission and purpose 
• Other distinctive characteristics of the business

For example, to understand the nature of business, we can classify the “nature” into different categories:

• By product or service 
• By organizational setup
• By organizational structure
• By business type 

Nature of Business Definition

How do you define nature of business?

The definition of “nature of business” can vary from one person to another.

The nature of business is a statement about a company’s offering to its clients, its industry, legal structure, or any other distinctive qualities of the business.

For example, if you say a company in the “private sector”, you evaluate the nature of the company based on its nature to earn profits.

If you say that a company is the “manufacturing sector”, you refer to a company primarily concerned with manufacturing operations.

If you refer to a company as a “corporation”, you are qualifying the nature of the company by assessing its legal structure.

Let’s look at different categories in which you can classify the nature of different businesses.

Nature of Business Categories

To better illustrate the concept, we have put together a list of different ways you can view or consider the nature of your business.

Nature of business types 

The nature of business can be considered as business types.

A business type refers to the market sector in which the company operations, such as:

• Government sector
• Military sector
• International sector
• Private sector
• Technology sector
• Merchandising sector
• Service sector
• Manufacturing sector
• Non-profit sector
• Public sector 

Within each of these sectors, you may have subcategories.

Organization Type

Within our nature of business list, the nature of company can be viewed as the manner the company has been structured.

A company’s organizational setup can be:

• A corporation
• A partnership
• A sole proprietorship 
• A limited liability company 
• A limited liability partnership 

The legal manner of how the business entity formed is an angle to describe the nature of your business.

Business Classification 

You can consider the “nature” of a business based on its industry classification.

The government classifies all companies into different categories.

This is useful for research and statistical purposes allowing the government to track how a specific industry or business category is doing in the economy.

There are two business classifications commonly used:

• The Standard Industrial Classification (SIC)
• The North American Industry Classification System (NAICS)

SIC is a classification used by the U.S. Department of Labor whereas the NAICS is a classification system jointly used by Canada, Mexico, and the United States.

Nature of Business Examples

Let’s look at a nature of business example by type of business to complete our illustration of this notion.

Service Business

A service business is a type of business that provides intangible products to its clients.

For example, the service business can be subdivided into:

• Accounting firms
• Public relations firms
• Medical practitioners
• Software consultants
• Marketing consultants
• Banks 
• Repair shops

Merchandising Business

A merchandising business is a type of business that buys products wholesale and sells them at the retail price.

Their overall objective is to sell products at a price point higher than what it cost them.

Examples of merchandising companies can be:

• Grocery stores
• Convenience stores
• Distributors
• Resellers 

Manufacturing Business

A manufacturing business is a type of business that purchases products to combine them into something new.

They transform existing products (such as raw material or other material), into manufactured goods sold to customers.

For example, a manufacturing company may purchase nuts or grains as raw commodities and produce consumer-friendly goods.

Takeaways 

So what is the legal definition of Nature of Business ?

Let’s look at a summary of our findings.

Nature of Business

If you enjoyed this article on Nature of Business , we recommend you look into the following legal terms and concepts. Enjoy!

Related legal terms 

Business definition  Characteristics of business  Cooperative  Financial independence  Knowledge workers Limited liability company  Market expansion  Nature of management  Partnership Revenue generation Sole proprietorship Types of businesses Author

• Business Classification

RELATED ARTICLES

What is contract manufacturing (all you need to know), types of business strategy (all you need to know), is it cc’d or cc’ed (explained: all you need to know), most popular, what is a special purpose entity (all you need to know), what is corporate raiding (explained: all you need to know), what are golden shares (explained: all you need to know), what is a targeted repurchase (explained: all you need to know), what is a friendly takeover (explained: all you need to know), editor's picks, hard money loans (what it is and all you should know: definition), letter of acceptance (what it is and how it works), white knight (definition & strategy: all you need to know), how to start a business in california [step-by-step ultimate guide], reservation of rights (meaning: all you need to know).

• Privacy Policy
• Terms of Use

Telling the truth about SME life today

Home » Business » Nature of Business Meaning – Examples & Types

Nature of Business Meaning – Examples & Types

• June 4, 2023

Business success and a positive trajectory depend on many external factors. These include market dynamics, level of competition strength and internal strengths and weaknesses. All choices made by a business, big and small, will impact the type of company it will become and what it looks like. This leads us on to the nature of business.

Table of Contents

What is the Nature of a Business?

The nature of business defines the core identity of a company – what it does, how it operates, and its place in the market. Getting to grips with this concept provides valuable insight for entrepreneurs, investors and other stakeholders when evaluating a business.

Put simply, the nature of business refers to the fundamental characteristics that shape a company’s purpose, offerings and market approach. It encompasses aspects like:

• Legal structure – e.g partnership, private limited company
• Products and services – what the business sells or provides to customers
• Target market – the customer segments the business caters to
• Business model – how the company generates revenue and profit

So for example, an online retailer has a very different nature of business compared to a bricks-and-mortar supermarket, even though both sell groceries. Understanding these traits helps stakeholders make informed assessments about a company’s identity and potential value.

Business Nature Components

Purpose:  Every business starts with a purpose. It’s the foundation, answering why the entity exists. For some it’s selling products, for others providing services, and many it’s solving market problems. This purpose becomes the guiding North Star for all activities and decisions.

Activities:  Businesses have set operations like people have daily tasks. This could include designing products, sourcing materials, manufacturing, marketing and sales. These activities fulfil the business’s purpose.

Scale:  Business scale varies. Some operate locally like mom-and-pop shops. Others are huge enterprises spanning countries and continents. Scale dictates reach, operations and complexities.

Stakeholders:  Businesses involve stakeholders like owners, employees, customers, suppliers and communities. Each has a role, interest and expectation.

Economic Contribution:  A business contributes via job creation, taxes, trade and innovation. It plays a key economic role.

Risks & Challenges:  The landscape is dynamic with competition, trends, regulations and events posing risks. Recognizing and navigating challenges is vital.

Legal Structure:  Businesses operate within legal frameworks. Structures like sole proprietorships, partnerships and corporations define responsibilities, benefits and limitations.

In summary, a business’s nature blends purpose, functions, size, relationships, economic contribution, challenges and legal standing. These interplaying components form the intricate mosaic of business.

Nature of Business Examples

What impacts the nature of business, legal structure.

A company’s legal structure has implications for ownership, financing, taxes and operational processes. Common structures include:

• Sole proprietorships – owned and run by one individual who has unlimited liability
• Partnerships – tow or more co-owners who share financing, profits and operational duties
• Private limited companies – separate legal entities that limit owners’ liability to their investment amount
• Public Limited companies – can trade shares publicly and often have access to great financing
• Non-profit organisations – focus on social impact rather than profits

Choosing an appropriate legal structure depends on the founders’ growth ambitions, target customers, financing needs and appetite fr personal liability. An eco-friendly startup might begin as a partnership before transitioning later toa private limited company structure to attract investor funding.

Products & Services

A company’s offering encompasses what it sells to customers – whether physical goods, services, digital technologies or even ideas. The specifics here characterise the business’ core purpose. For example, a bakery sells artisanal bread and cakes, a web design agency sells bespoke websites and a charity sells the idea of positive social change through donations.

Over time, businesses may adapt or expand their offerings to pursue new opportunities or reach to market changes but the original core products and services tend to shape ongoing business identity and purpose.

Target Market

The specific customer groups a company sells to dictate much of its branding, proposition development and communications tactics. Market segmentation by demographics, geography, behaviours and values allow organisations to match products/services to buyer preferences.

For example, a specialty pet food company that prides itself on using the finest ingredients may focus its marketing on targeting affluent urban dog owners who are more likely to pay a higher price for the knowledge that better ingredients are used.

Industry Sector

The industry sector that a business operates in directly impacts its competitive environment, distribution channels and regulatory obligations. Knowing that industry landscape is key to analysing a company’s market positioning and potential.

Business Model

Every company’s business model encompasses how it generates sales revenues and profits from its offerings. The main areas of a business model usually include:

• Value proposition – products/services offering value to customers
• Target market – the selected customer segments
• Distribution channels – how deliverables reach customers
• Revenue streams = where sales income is generated
• Cost structure – the expenses required to operate
• Margin model – how the profits are produced from revenue

The Internal & External Factors Influencing The Nature Of Business

Internal factors.

• Ownership Model – Group owned businesses rather than sole proprietorships often have wider financing options available to them but the downside is, having multiple people to run decisions past, can slow down decision making timelines.
• Management culture – Visionary leaders can create strong innovative work cultures whereas prudent leaders tend to create steadier, less risky operations.
• Company size – Large organisations benefit from economic scale but small operations tend to be more agile when it comes to customer interactions.
• Technology used – Digitally driven companies are fundamentally different from traditional manual operations. As digital revolutions continue to happen, back office processes transform to provide customers with better front end experiences and personalisation.
• Staff Skills – The skills available across employees will make or break your business. If you can’t get the talent required in house, then small firms may need to outsource specialist areas.
• Purpose Alignment – Workforce diversity, community development and social justice can also reshape business nature. Younger workers choose employers that can demonstrate genuine commitment to moral causes rather than simple virtue signalling.

External Factors

• Economic Landscape – Thriving economies provide more opportunities, whereas recessions force consolidation and cuts
• Geography – Rural businesses often focus on community values whereas city-based firms can afford to follow consumer trends
• Environmental Obligations – With climate change and ecological threats prominent, sustainability conscious customers will want to see greener practices in businesses they support. For example, petroleum companies investing in renewable energy sources would be an example of environmental obligations shaping the nature of business.
• Regulations – Plenty of industries have specific compliance rules to follow which can fundamentally shape operations
• Competitors – Start-ups in crowded marketplaces must be able to disturb, whereas monopolies control captive customer bases.
• Market Globalisation – Trading across borders requires adaptations to make in branding, trading partnership and supply chains.
• Investor demands – When investors are expecting results, companies may feel under pressure to scale up quickly
• Customer expectations – Customer focused businesses must continue to adapt to the needs and demands of consumers. Those who fail to continually increase the value they offer to their customers face displacement by others who will.

These internal and external factors are constantly evolving and changes here will inevitably impact the strategies and processes required within the business. In some cases, this may lead to a change in the overall nature of business.

Types Of Businesses and their Nature

Legal structures and ownership models have a big impact on the taxes, liabilities and grow strategies available to organisations. Here is an overview of the main types available in the UK:

Sole Proprietorships

A sole proprietorship is a business owned and run by a single individual. This is one of the easiest business structures to set up and manage, only requiring a unique business name. The owner then has complete control over strategy, operations and liability. This means that personal assets can be pursued to settle business debts as there is no distinction between the owner and the business.

This type of business tends to work well for solo entrepreneurs with specialist professional skillets such as photography, consultants or tradespeople. Many people love the simplicity, autonomy and low start up costs, but lack of work during slow periods, financial protections, and difficulty if operations come to a standstill reflect the downsides of this type of business.

Partnerships

Partnerships allow two or more co-owners to set up and operate a business. All parties will contribute financing, decision making and operational oversight whilst splitting any profits made. This type of business structure allows for owner-operator involvement whilst knowledge and resources are pooled to greater business impact.

Partnerships tend to open up wider funding opportunities, diverse skill sets and expansion opportunities across several locations. All costs, responsibilities and liabilities are shared too. For this to work, an excellent collaborative approach is required which involves communications and transparency over financials and performance.

Disagreements can quickly derail partnerships but this type of set up is common in professional services such as legal firms, medical practices and architecture firms. Overall, partnerships encourage contribution to the business whilst avoiding some of the limitations faced by sole proprietors.

Private Limited Companies

A private limited company creates a legal structure that is separate from its owners. This means the company is owned by shareholders in accordance with their initial investments but that their liability is also limited to the amount invested. The benefit of this set up is that personal assets cannot be pursued to settle company debts.

The independent legal entity of the business means company ownership can be transferred more easily through the buying and selling of shares, and limited companies are also able to access favourable tax efficiencies in several areas.

The downside of a limited company is the higher volume of administrative work required to operate. Including extensive financial reporting, annual government filings and statutory obligations; They must follow regulations around hiring, workforce policies and contracts.

Public Limited Companies

Public limited companies (PLCs) can raise funds by trading shares openly though stock exchanges. Doing this opens up the business for the biggest investment to fund projects and fuel growth. To do this, a business must meet strict reporting and operational standards.

The separation of ownership from management requires non-executive directors and structured leadership teams. PLCs operate with greater public scrutiny of salaries, diversity policies and carbon footprints and underperformers will face pressure to make changes to strategy or leadership.

Non-Profit Organisations

Rather than maximising profits for owners, non-profit organisations focus on social impact and community benefit. To do this, most require donations and public sector funding to fund and are also reliant on volunteers to make up a proportion of their workforce.

Any profits cannot be divided between owners, but must stay within the company. Examples of these kinds of businesses include wildlife conservation groups, universities, medical research charities and cultural institutions. Spending is constrained and should be purposeful to reassure donors that their money is being used wisely and for the good intentions of the operation rather than internal functions. Successful non-profit companies have strong community support who engage emotionally with their causes.

The Evolving Nature Of Business

Whilst most businesses will carry their original purpose and niche with them, the nature of business may evolve over time as the company grows or responds to external or internal forces impacting it.

The Role Of Stakeholders

Within business environments, internal and external stakeholders will always have an influence over an organisation’s direction.

Staff and unions that lobby for higher pay, improved working conditions and greater work-life balance can modify company behaviour over time.

Communities

Neighbouring communities affected by business operations advocate for social programs, environmental protections and local economic opportunities which will feed into corporate policies.

Business Partners

Suppliers will always request increased margins and better terms of trading while distributors request support in pushing products. The negotiations required for these relationships will inevitably shape operations.

Wrapping Up

The nature of business refers to the key characteristics of an organisation that shape its operations, identity and competitive landscape. Understanding these things ensures that entrepreneurs, inventors and other stakeholders make informed decisions about business potential, investment decisions and the timeframe that they might see a return on their investment.

The exact makeup of a business will depend on leadership, sector, strategic choices and where the company is in its cycle, but market focus, deliverables, capabilities and growth ambitions will all shape the way the business runs.

• April 2, 2024

How Long Can Employees Be On Sick Leave Before Dismissal?

Why Businesses Need To Partner With Local Education Providers To Develop Relationships For Future Top Talent Recruitment

• March 28, 2024

Building A Culture Of Inclusivity: Leadership Practices In Diverse Higher Education Environments

• March 25, 2024

How To Set up a Holding Company – Ultimate Guide

Related Stories

Redeemable Shares Explained

What Is A Limited Company Strike Off?

How To Resign As A Director Of A Company

What is a Shareholders Agreement?

External v Internal Finance Sources

Advantages & Disadvantages Of Swot Analysis

The Ultimate Guide to Sole Trader Bookkeeping 

What Is Conscious Business & How Can We Cultivate It?

What Is The Flat Rate Scheme And Its Percentages

Taking Holidays As A Freelancer

How to Start an Etsy Shop – Everything You Need to Know

What is Business Administration?

How to Write a Freelance Contract

10 Most Popular Ways to Promote Your Business

Qualities of a Good Team Leader

Funding Female-Led Businesses: The Way Forward

What Does Your Business Branding Say About You?

Menopause in the Workplace: Conclusions from WEC Report 2022

How Personalisation Can Improve the Employee Experience

Why Your Web Host Matters: Is It The Key To Improving SME Site Performance?

Three Tips for Success When Starting Your New Position as a Team Manager

How to Mold Top-Performing Employees

Smart1 Recruitment: Going the Extra Mile with Mike Harper

Why Personal Experience is the Key to Tech Launch Success

Investing in Well-being to Stem the Tides of the Great Resignation

Planning for the Future: 5 Tips for Building a Robust Financial Forecast

5 Types of Sales Enablement Content You Need for Your Business (and Tips on How to Create It)

How to Grow Your Business Organically

Drive to De-Risk and Crystallise Value Spurs Interest in ‘Cash-Out’ Opportunities

Work Perks: Why Your Business Should Say Goodbye to the Free Gym Membership

Celebrating British Excellence with Sarah Austin

Has Remote Working Changed B2B Purchasing Forever?

Out with the Old, In with the New: How Digital Agreements Redefine the Present of Work

Pitch Deck Design Trends and Top Tips for Making Your Pitch Deck Stand Out

Super Apps are the Way Forward for Modern Parents: Interviewing the Creator of Onoco

Financial and Funding Business Contingency Planning with Kevin Harfield – MD JamesField Executive Limited

Google Launches New Core Update: What This Means for Businesses

Why Firms Can See the Global Supply Chain Crisis as an Opportunity

Does your Business have what it takes to win at The Lloyds Bank British Business Excellence Awards?

Tackling Inflation As An SME: 5 Strategies For Corporate Success

How to find Inner Safety, Sleep Well and Increase Energy and Performance

Preventing a Wage Spiral: How to Balance Talent Retention and Recruitment Post-Pandemic

How To Beat Loneliness In The Workplace

How To Get Started In Property Investment

Conquering Dragons’ Den with cheesegeek Founder, Edward Hancock

How Small Businesses Can Capitalise on Demographic Changes

Lessons from the tv world: the link between developing tv shows and new businesses.

Branded Content Can Be Key To Protecting Your Reputation

Elon Musk Buys Twitter: What Does it Mean for SMEs?

Eskimoz Conquers the European SEO Market

“Inspire your team to excellence”: Interview with Marie Grove Walton

TikTok for Business: How to Market to Millions

How Has COP26 Affected The Corporate Sector Six Months Later?

What Happens if Britain’s Backbone Breaks?

It’s Time Businesses Reboot Their Employee Wellbeing Experience Tools

The Formula for High Fashion: How Sunglasses Deals Became Big Business for the F1 Industry

Should Employers Provide Workers Access to Mental Health Services?

The Best Tools for Creative Freelancers

The Chancellor’s Spring Statement 2022: The Summary

Is Your Brand a Great Design Story in the Making?

Opening of GOV G-Cloud 13 Framework Means Huge Opportunities for SMEs

Lewis Hamilton: Lessons in Resilience and Determination

Adopting a People First Approach to Technology

Women-Led Businesses You Should Be Paying Attention To

Litalist: Building a Community Between Book Lovers and Booksellers

Breaking into the Publishing Industry? Start Your Own Crowdfunded Publisher

Marketing Strategies in a Technology-Driven Age

Business Leaders Are Under Unprecedented Pressure – But Have Unprecedented Opportunities

Productivity Wars: How Managers Can Re-Inspire Their Teams

Russian Invasion of Ukraine Threatens Global Economy Amid Massive Recession

Queer-owned Small Businesses: How To Celebrate LGBTQ+ History Month And People All Year Round

“Creators aren’t aspirational dreamers, they’re a critical part of the economy,” says Lotanna Ezeike, Founder and CEO, XPO

Why Parental Leave Isn’t the Issue for Young Professionals

With Love – Taking the Opportunity to Care for Your Staff on Valentine’s Day

Oldest Pair Breaks Record Rowing Talisker Whiskey Atlantic Challenge

Creating Skincare Brands for the TikTok Generation with Tiffany Salmon

How to Surmount Your Self-Doubt as an SME Entrepreneur

Social First, CV Second: How Gen Z is Changing the Hiring Process

Ocean Club Holidays: Vertically Integrated, Organically Grown

Private Capital Could Help Drive SMEs Forward on the Road to Recovery

Covid Rules To Be Lifted In England Over The Next Week

Pioneering Adtech Company Keeps TV Advertisers Informed and Adaptable

The New Year: The New Loyalty and Rewards Strategy

What Business Owners Need to Know about Workplace Mental Health Support

Are Print Magazines Still Viable in our Increasingly Digital Lifestyles?

How to Make the Most Out of the New Year

Why Emotional Intelligence is Key to Successful Conscious Leadership

Ways to Avoid Burnout as a Freelancer

3 Easy Ways to Simplify Your Small Business For Streamlined Success

Elizabeth Holmes Found Guilty of Fraud in Theranos Case

There’s Bias in Burnout, and Things Need to Change

Is There a Correlation Between How You Sleep and How You Work?

Fashion’s Plagiarism Habit and The Impact on Small Brands

Living the Laptop Lifestyle with Social Cactus

The Competition to Create the Best Christmas TV Advert

Some Businesses Won’t Survive This Christmas Under New Omicron Restrictions

Putting Cyber Security First: Why the Latest Trends make this Critical for SMEs

Finding the Perfect Gift: Interview with Louise Doyle and Steph Scholes

How Innovation is Driving New Sustainability Goals

How your SME can capitalise on the Festive Season

Narce Media: Video is the Ultimate Content Currency

A Chanel Christmas Story: How Important Are Customer Perceptions of Value for Money?

Starting Out in a New Market

Lush Exit: Can Brands Survive Without Social Media?

Introducing the Entrepreneur Who Has Banished Leathers for Making Timeless Sustainable Accessories

Increasing E-Commerce Sales with Website Analysis Insights

6 Tips for Selling your Business

Cybersecurity Business Leading the Charge Against Business Threats

“Diversity of thought” – Why it’s Crucial to Business Success

Did COP26 Inspire Business Sustainability Or Just Encourage A Future Of ‘Greenwashing’?

“The Entrepreneur Ship” Takes on the Talisker Rowing Challenge

What Lidl’s Pay Rise Shows Us About the Competition for Staff?

Speaking your Mind as an Introvert in the Workplace

Wonsulting and TikTok Resumes: Revolutionising Recruitment for the Future

The Rising Wages Impact on Small Businesses

Black Friday Success: Ditch the Discounts and Get Creative

The big vision for small businesses

South Africa: Rise of the Rainbow Nation

Why Algorithms Are Part of The Solution to a Carbon-Offset Future

US abolishes reconciliation requirement

CBI champions Britain’s growing mid-sized firms and £59bn economic contribution

Why businesses can’t have diversity without inclusion

What we’ve learnt building a global firm

3 in 4 businesses considering post Covid-19 ?meet up” spaces rather than full time offices

What triggers rising trend of presenteeism and how to improve staff health and productivity

Implementing an effective retention strategy to stop losing your best people, more from business.

What Are Unsociable Hours And Do You Have To Pay More

What Are The Letting Agent Fees For Landlords?

Where To Sell Your Business

Quantitative vs Qualitative Business Research

6 Effective Business Strategies For Guaranteed Growth

What does a Tender mean in Business?

What Are The Main Roles & Responsiblities Of A Business Analyst

Understanding ESG And Its Potential Impact On Your Business

The Advantages And Disadvantages Of Coworking Spaces

5 Ways Businesses Can Effect Radical Change During an Economic Downturn

How to open a shop in the UK? What you need to know for a successful launch

How to offer finance to your customers in the UK

Advantages of proprietary software – Is it right for your business?

EORI Numbers: The Ultimate Guide

Why Perfection is the Enemy of Progress for Entrepreneurs

Do employers have to pay shift allowance?

If you enjoyed this article, why not join our newsletter?

We promise only quality content, tailored to suit what our readers like to see!

Published by Prosper 2 Media

Do you want to write for us click here to find out how.

Real Business has championed entrepreneurship in the UK since 1997. It is now the main source of inspiration, education, and collaboration for the owners of fast-growing businesses, from startups to mid-market companies. Real Business provides readers with high profile interviews, news, insight and industry benchmark reports, as well as a growing stable of events tailored to SME growth.

Privacy Policy

Privacy Overview

Apply for Instant Loan

Download Our App

• Eligibility
• Interest Rates
• Document Required

EMI Calculator

• Personal Loan App
• Instant Cash Loan
• Mobile Loan
• Short Term Loan
• Salary Advance Loan
• Education Loan
• Medical Loan
• Travel Loan
• Debt Consolidation Loan
• Home Renovation Loan
• Marriage Loan
• Consumer Durable Loan
• Personal Loan For Women
• Personal Loan For Doctors
• Personal Loan For Businessman
• Personal Loan For Self-Employed
• Personal Loan For Corporate Employees
• Personal Loan For Government Employee
• Personal Loan For Salaried Employees
• Personal Loan For Chartered Accountant
• Personal Loan For Defence Personnel
• Unsecured Business Loans
• Bill Discounting Or Invoice Discounting
• Medical Equipment Loan
• Working Capital Loan
• MSME/SME Loan
• Car Insurance
• Bike Insurance
• Instant Loan
• Emergency Loan
• Personal Loan For Teachers
• Dealer Locator
• Customer Care
• Pay Online --> Pay Online
• Pay from anywhere
• Customer service app NEW
• Covid Safety Measures NEW
• Bill Discounting Portal
• RBI IRCAP - Customer Education DISCLOSURE
• Fraud Awareness
• Customer Education discclosure
• Unsecured business loans

Nature of Business - All You Need to Know About It

• 19 October 2023
• 2023-10-19 00:00:00

Table of Contents

Factors such as market dynamics, competition, and even your business loan interest rate can significantly impact your venture's trajectory. Just as the heart pumps lifeblood throughout the body, the nature of your business is the heartbeat of your entrepreneurial journey.

As we dive deeper into this topic, remember that every decision, no matter how small, shapes the very essence of your enterprise. So, let's embark on this enlightening journey together.

What is the Nature of a Business?

Simply put, The nature of business is like a company's DNA. It pinpoints an enterprise's primary activities and essence, setting the stage for its missions and visions. Just as every individual has a unique story, each business has its distinct character and purpose. It's the heartbeat of entrepreneurial tales. Read also:  Top 10 Service Business Ideas for 2023

To Avail Unsecured business loans

The components of the nature of business.

The business world is vast, but every business revolves around specific fundamental components at its core. These components come together to define a business's structure, purpose, and functions. Here's a deeper dive into these integral elements:

Purpose: Every business starts with a purpose. It's the foundation, answering the question: "Why does this entity exist?" For some businesses, the objective is to sell products; for others, it's about providing specialised services, and for many, it's about solving specific market problems. This purpose becomes the North Star, guiding every business activity and decision.

Activities: Just like we engage in daily tasks and routines, businesses have their set of operations. This could range from designing products, sourcing materials, and manufacturing to even marketing and sales. These activities define what the business does daily to fulfil its purpose.

Scale: The size or scale of a business can vary. Some operate within small local communities – think of the mom-and-pop shops. Others are sprawling enterprises with a footprint that spans across countries or even continents. The scale dictates the reach, operations, and, often, the complexities a business might face.

Stakeholders: Businesses don't operate in isolation. They involve various stakeholders, including owners, employees, customers, suppliers, and even the communities they operate in. Each stakeholder has a role, an interest, and an expectation from the business.

Economic Contribution: A business isn't just about its owners or employees. It plays a pivotal role in the broader economy. Through its operations, it contributes via job creation, taxes, boosting trade, and even fostering innovation.

Risks & Challenges: The business landscape is dynamic. External factors like competition, market trends, regulations, and even unforeseen events can pose challenges. Recognising and navigating these risks is vital for the business's sustainability and growth.

Legal Structure: Businesses operate within a legal framework. Depending on the region or country, various legal structures are available, such as sole proprietorships, partnerships, or corporations. This structure defines legal responsibilities, benefits, and limitations a business has.

To sum it up, the nature of business is a blend of its purpose, daily functions, size, interconnected relationships, contribution to the economy, potential challenges, and legal standing. Each component interplays with the other, forming the intricate mosaic of what we know as 'business'. Read also:  Top 10 Profitable Wholesale Business Ideas for 2022

List of Natures of Businesses

Here's a concise list of various natures of businesses:

This list gives a brief overview of various business categories.

Types of Business Nature

Businesses come in various forms, each distinguished by its nature and purpose. Understanding these types is essential for anyone delving into the business world. Let's explore the most prominent natures of businesses:

Manufacturing: Manufacturing businesses convert raw materials into finished products. Examples include factories that produce cars, electronics, or clothing. They utilise machinery, human labour, and technology to produce goods on a large scale, which are then sold to wholesalers or retailers.

Retail: Retail businesses sell products directly to consumers. Think of the shops you visit, like clothing stores, supermarkets, or electronics outlets. Their primary goal is to provide consumers with products they need or desire, usually in smaller quantities than wholesalers.

Wholesale: Wholesalers purchase products in bulk, typically from manufacturers, and sell them to retailers or other businesses. They act as intermediaries, ensuring that retail stores have a consistent supply of products for their customers.

Service: Service businesses offer intangible products, which are services. These can range from consulting and legal services to salons and car repairs. Their primary asset is expertise, and they monetise it by helping clients or customers achieve specific outcomes.

Agriculture: These businesses are involved in farming producing crops or livestock. Modern agriculture goes beyond traditional farming, including organic cultivation, fish farming, and even agro-based product processing.

Real Estate: Real estate businesses deal with properties - buying, selling, or leasing. They play a crucial role in the housing sector, commercial spaces, and land sales. Real estate agents, property managers, and developers all fall into this category.

Transportation: Transportation businesses are all about movement. Whether it's a taxi service, a shipping company, or an airline, these businesses move goods or people from one place to another, ensuring that both commodities and individuals reach their destinations.

Healthcare: Healthcare businesses provide medical services to individuals. This includes hospitals, clinics, diagnostic centres, and pharmacies. They focus on health promotion, illness prevention, diagnosis, treatment, and rehabilitation.

Financial Services: This category includes businesses like banks, insurance companies, and investment firms. They manage money, assets, and liabilities. Their services are essential for both individuals looking to save, invest, or insure and businesses seeking capital or risk management.

E-commerce: E-commerce businesses operate online, selling products or services directly to consumers via the Internet. This model has seen significant growth due to digital advancements and changing consumer behaviors.

The nature of a business defines its primary activities, how it operates, and its role in the market. Whether it's converting raw materials, selling products, offering expertise, or providing essential services, each business nature has its unique challenges and opportunities. Recognising these types helps stakeholders make informed decisions and navigate the vast business landscape more effectively. Read also:  Business Growth and Expansion - How to Grow Business?

Nature of Business Example

Let’s take an example of a Cafe. They provide a space for customers to enjoy beverages, light meals, and a social atmosphere. The core activities involve preparing and selling coffee or tea, along with snacks. Operationally, cafes purchase raw materials, process them using equipment, manage suppliers, hire staff, and handle finances for profitability. 

Promotion includes social media marketing and loyalty programs. Legal compliance is integral, involving health standards, licenses, and tax payments. A cafe business isn't just about coffee; it's about offering a comprehensive experience, blending quality beverages, food, ambience, and service, all while ensuring smooth operations and regulatory adherence.

How Business Loan Helpful to Start Different Types of Business?

• Startup Costs: Many businesses require significant upfront investment for things like equipment, inventory, office space, licenses, and permits.
• Expansion and Growth: As businesses grow, they often need additional funds to expand operations, hire more staff, or enter new markets.
• Technology and Innovation: In today's competitive business environment, staying technologically current is crucial.
• Inventory Management: For businesses involved in retail or manufacturing, maintaining adequate inventory is critical

Steps to Apply Business Loan to Start a Different Nature of Business

The nature of a business provides a lens through which one can understand its core activities, objectives, and the value it brings to the market. Whether a business is in retail, manufacturing, services, or any other sector, understanding its nature is pivotal for strategic planning and making informed decisions.

For instance, factors intrinsic to a business's nature can significantly influence aspects such as the business loan interest rate it might secure from financial institutions. As businesses navigate their industry landscape, acknowledging and adapting to their inherent nature becomes instrumental in fostering growth and sustainability.

Frequently Asked Questions

1. How quickly can I expect loan approval, and does it vary by industry?

Approval timelines vary, but certain industries may experience faster or slower processing times based on risk assessments and the complexity of the business model

2. What is the nature of modern business?

Modern business is digital, global, customer-centric, and sustainable, prioritizing innovation, adaptability, and tech integration to meet market and consumer needs.

3. What is your business type?

A business type defines a company's legal and operational structure, like sole proprietorship, partnership, corporation, or LLC.

4. Can a business have more than one nature or characteristic?

Sure, a business can have multiple facets. For example, it can produce goods, provide services, and do e-commerce, mixing different aspects to succeed.

5. How does the nature of business impact marketing strategies?

The nature of business dictates its target audience, product positioning, and competitive landscape, directly influencing marketing strategies in terms of channels used, messaging, and engagement tactics to reach potential customers effectively.

6. Can the nature of business change over time?

Yes, the nature of business can evolve due to market demands, technological advancements, regulatory shifts, or strategic decisions, requiring businesses to adapt their operations.

How to Track Personal Loan Application Status Online?

Personal Loans are the best funding options for people who nee . . .

How To Get Instant Personal Loan for Low CIBIL Score?

Personal Loan with Low CIBIL score . . .

Instant Personal Loan without Salary Pay Slip or Bank Statement

An Instant personal loan is a quick and convenient method to cate . . .

Our Top 10 Picks for the Best High Mileage Electric Bikes and Scooters in India

The electric bike segment has drastically boomed in India in r . . .

How to Calculate Your Personal Loan EMI Using Excel?

Equated monthly installments (EMIs) are the installments that you . . .

ट्रांसपोर्ट बिज़नेस कैसे शुरू करें?

Everyone in India and abroad was surprised by the government’s announcement to replace ...

Best Affordable Adventure Tourer Bikes in India 2024

Penalty for Late Filing of Income Tax Return (ITR)

Hero FinCorp

Disbursement

The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.

Subscribe to our newsletter and get exclusive deals you wont find anywhere else straight to your inbox!

Public Notice

Notice No. 1 of 2

Public Notice: Moratorium Message

Dated: march 31, 2020.

Dear Customers,

Today, the entire world is facing a crisis in the form of Covid-19, and it is during these times that we all need to come together to support each other and to act responsibly.

In light of the recent nationwide lockdown, we at Hero FinCorp are providing a three months moratorium to our loan customers as per eligibility and guidelines issued by RBI. This moratorium facility is only applicable for EMIs due between March 01, 2020 and August 31, 2020. EMIs / over dues prior to March 01, 2020 are not eligible for moratorium.

Please note, if you opt for the moratorium, interest will continue to accrue for the duration of the moratorium period at the currently running interest rate on your loan. This additional interest will be collected from you by extending the original tenor of your loan. We will also share an updated loan repayment schedule which would include all relevant details.

We urge customers to use this option only if absolutely necessary. This facility has been especially designed for those customers whose cash flows have been severely affected and they do not have sufficient savings or other income sources which they could use for paying their EMIs. The downsides of opting for the moratorium include:

• 1. Higher interest costs
• 2. Longer loan tenor
• 3. You pay more overall

If you can, then you must continue to pay EMIs as per your existing Repayment Schedule. This would be a far superior option in the long run as it offers several benefits, it is easier, simpler, and cheaper to do, so choose wisely!

To apply for moratorium, please send us a request from your Registered Email Address, along with your Loan Account Number and Registered Mobile Number. Post which we shall initiate the moratorium for unpaid EMI of March 2020 (if any), and for EMI of April and May 2020.

For moratorium request or any other information, please write to us at:

Retail Finance Customers:

Corporate Finance Customers:

Best Wishes, Team Hero FinCorp

Notice No. 2 of 2

Public Notice: Update on Hero FinCorp’s operations during COVID-19

Dated: march 26, 2020.

At Hero FinCorp, health and safety of all our employees, customers, and stakeholders is a top priority. In the wake of the Corona virus (COVID-19) outbreak, we are strictly adhering to guidelines from the government and other concerned authorities, in order to contain the spread of the virus and minimize impact on business.

During this challenging time, we have taken several measures to ensure safety of our employees, this includes providing work from home option for all our workforce and keeping a regular check on their and their family’s well-being. We have shut–down our offices and introduced alternate ways of working through Digital modes to ensure safety and business continuity. We are also working with our vendors and partners to ensure compliant and robust BCP plans are operationalized at their end as well.

Given the 21 day nation-wide lockdown announced by the honorable Prime Minister of India on March 24, 2020, we have put in place various initiatives to ensure that there is zero disruption in critical operational processes. Accordingly we are ensuring regular and relevant communication goes out to all our stakeholders and investors on the status of our operations.

While we remain committed to providing high levels of service to our customers, given the circumstances, we urge our customers to co-operate with us by ensuring the following:

• 1. Choose E-mail channel for any loan servicing related request - This is a channel that has been strengthened to ensure quick resolutions to issues raised. While our call center remains operational, customers might encounter longer wait times, as they are operating at a reduced capacity to accommodate work-from-home policy.
• 2. Ensure timely payments of EMIs through digital channels – We urge our customers to remain disciplined towards their EMI re-payments. We have made available numerous digital modes of payments on our official website (www.HeroFinCorp.com), and encourage our Retail customers to pay their dues by leveraging the same.

This is an unprecedented situation, and we at Hero FinCorp remain fully focused on overcoming the common crisis that we face. We are confident that with a little faith and discipline we shall soon see this situation through and normal business operations shall resume.

In case of any query regarding your loan, re-payment or loan servicing requests, please do reach out to us on the below mentioned E-Mail IDs:

For Retail Loans Help

• Two-Wheeler
• Personl Loan
• Simply Cash

[email protected]

For Corporate Loans Help

• Machinery Loans
• Loan Against Property
• Corporate loans and Structured Finance
• Doctor Loans
• Supply Chain Finance/ Bill Discounting
• Medical Equipment Finance
• Construction/ Healthcare/ Education Finance

[email protected]

Team Hero FinCorp

Nature of a Business Plan: Everything You Need to Know

The nature of a business plan discusses what the future of the business is. It should list how you plan to run the company and what you plan to do with it. 3 min read updated on February 01, 2023

What Are the Parts of a Business Plan?

Even if you just write on an envelope a few ideas about your business strategy, you've started a business plan. Business plans can be helpful, as they list all the tasks necessary to run a company. Entrepreneurs use them to explain their vision to possible investors. These plans can be used by firms that want to attract important employees, find potential business prospects, handle suppliers, and understand how to better manage their companies.

Items to include are the industry, the business concept, the business structure, what the service or product is, and what your marketing plan is in order for the company to be successful.

The marketplace section will talk about defining and analyzing possible customers. This includes where and who they are, what drives them to buy, and so on. The financial section includes your cash flow and income statement, a balance sheet, and additional financial ratios, including break-even analyses. You may want to invest in an accountant and a spreadsheet software program for this. There are seven main components in a business plan, including:

• Market strategies
• Business description
• Executive summary
• Development and design plan
• Competitive analysis
• Financial factors
• Management and operations plan

How Long Should Your Business Plan Be?

A helpful business plan can be short or long, depending on the reason you're creating it. It can be anything from a scrawl on a piece of paper to a detailed plan that's over 100 pages long. The average business plan runs between 15 and 20 pages, but there's room for variation. If your concept is simple, you might be able to define it with only a few words. If you're talking about a new business or industry, you'll need a much lengthier explanation to describe what your idea is.

What your purpose is will also define how long your business plan is. If you want to get millions of dollars to start a venture that's risky, you'll need to do plenty of convincing and explaining. On the other hand, if you use your plan internally to govern ongoing business, you can easily have a more abbreviated version of the plan.

Why Do Startups Need a Business Plan?

A traditional business plan writer is someone who considers themselves an entrepreneur and is looking for funds to start a new venture. Many successful companies originally started their plan on paper to convince investors they should put up capital to help them get started. There are many books on business planning that are aimed at the owners of startup businesses. This is because they're the least experienced and are likely the most appreciative of any help. However, small startups aren't the only companies that need a business plan.

Why Do Established Firms Need a Business Plan?

Not every business plan is written by an excited entrepreneur who is just starting their company. Many are written for and by companies that are well past the startup phase. For example, WalkerGroup/Designs was considered a well-established designer for large retailers. The founder thought of the idea of licensing and trademarking to apparel makers with the symbols 01-01-00. This was aimed at targeting the approaching millennium. Before the costly and difficult task of trademarking this around the world, the founder had a business plan that included sales forecasts. This was to convince larger retailers that it'd be smart to carry their 01-01-00 products.

Enterprises that are middle-stage might draft plans that help them get funding to grow their company similar to startups. However, they may be after larger amounts and looking for investors who will spend more. These enterprises feel it's necessary to have a written plan to manage their business that's already growing. This plan can be a helpful tool to get across their mission to potential suppliers, customers, and more.

If you need help with the nature of a business plan, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

Content Approved by UpCounsel

• Creating a Business Plan
• Service Business Plan
• Do I Need a Business Plan
• LLC Business Plan Template
• Sample of a Good Business Plan
• Startup Business Plan Presentation Template
• Business Plan for Existing Company
• Purpose of Business Plan Sample: Everything You Need To Know
• Details of a Business Plan
• Business Plan for New Company

Nature of Business: Definitions and Examples

Welcome to the exciting world of business! In this journey, we’re going to explore what business really means.

It’s not just about profits and offices; it’s a vibrant landscape where ideas take shape, needs are met, and dreams are realized.

At its core, the nature of business is to provide value, whether through products, services, or both, to a group of people or other businesses.

This exchange is the heartbeat of economies worldwide, large and small.

But what exactly constitutes the nature of business? It’s a rich tapestry woven with various elements – innovation, market strategies, economic impact, and so much more.

The nature of a business defines how it operates, competes, and serves its purpose in the vast economic ecosystem. Whether it’s a small local bakery or a global tech giant, each business has a unique DNA that sets it apart.

Throughout this article, we’ll dive into different business types, from startups to multinational corporations, explore various business models, and examine how external factors like technology and globalization shape the business landscape.

So, whether you’re a budding entrepreneur, a business student, or just curious about the business world, this guide will provide you with a comprehensive understanding of the nature of business.

Table of Contents

Defining Business in Today’s World

Now, let’s delve into what defines a business in today’s dynamic world. The nature of business is not static; it evolves with time, technology, and consumer behavior.

Today, a business can be defined as an entity that creates and sells goods or services for profit. But it’s more than just transactions and trade. The nature of business is about identifying needs and fulfilling them, creating value not just for the owners but also for customers, employees, and society at large.

In the modern context, a business operates in an incredibly interconnected environment. Technology, for instance, has transformed how businesses function, enabling them to reach a global audience and operate 24/7.

The digital era has given rise to new business models and strategies, shifting the focus from mere transactions to relationships and experiences.

Another defining aspect of today’s businesses is their adaptability. In a rapidly changing world, businesses must be agile, ready to pivot in response to market trends, consumer preferences, and economic shifts. This adaptability is crucial for survival and growth.

Additionally, the nature of businesses in society has expanded. Beyond profit-making, businesses today are increasingly held accountable for their social and environmental impact. This has led to a rise in sustainable practices and corporate social responsibility initiatives.

In summary, a business today is not just an economic entity; it’s a versatile, dynamic organism that plays a critical role in shaping the world we live in. It’s about creating meaningful experiences, fostering innovation, and making a positive impact on society.

The Core Elements of a Business

The product or service: heart of business.

At the center of every business is its product or service—the primary offering that meets the customer’s needs. This could be a tangible item, like a smartphone, or an intangible one, like software services.

The success of a business hinges on how well this core offering aligns with market needs and expectations. It’s about finding that sweet spot where your product or service solves a problem or fulfills a desire more effectively than anyone else.

Understanding Market Demand

Understanding market demand is like reading a road map; it guides businesses to where they should go. It involves researching and analyzing who the customers are, what they want, and how much they’re willing to pay.

A business that keenly understands its market can adapt and thrive, even in changing conditions. This understanding helps in tailoring products or services to suit customer needs, creating targeted marketing strategies, and finding new market opportunities.

The Role of Innovation in Business

Innovation in business is not just about coming up with new products; it’s a mindset, a way of thinking. It’s about constantly questioning the status quo and seeking better, more efficient ways to meet customer needs.

Innovation can be in product design, business models, customer service, or even in the way a company approaches its internal processes. Businesses that prioritize innovation tend to stay ahead of the curve, adapt to changes faster, and enjoy long-term success.

Types of Businesses: A Broad Overview

Small and medium enterprises (smes).

SMEs are the backbone of many economies. They are characterized by their smaller size, but don’t let that fool you—they pack a punch in innovation and flexibility.

These businesses often cater to niche markets or local communities and are known for their personalized customer service. They are also critical in generating employment and driving economic growth at the local level.

Large Corporations and Multinationals

Large corporations and multinationals operate on a vast scale, often with a significant presence in multiple countries. They wield considerable economic power and resources, allowing them to undertake extensive research and development, influence market trends, and access a global customer base.

These entities face different challenges, like managing complex operations and navigating diverse market regulations.

Non-Profits and Social Enterprises

Non-profits and social enterprises are unique in the business world. Their primary goal is not profit, but social good. They operate by providing services or products that address societal issues—be it in health, education, or environmental conservation.

These organizations often rely on donations, grants, and other funding sources and are increasingly adopting business strategies to sustain and increase their impact.

Sector-Specific Business Nature

Businesses differ vastly depending on the sector they operate in and the target market they are focused on. Each sector has unique characteristics, challenges, and opportunities, shaped by different market demands and regulations.

Manufacturing Sector Insights

The manufacturing sector is the powerhouse of tangible products, from cars to canned food. A manufacturing business is characterized by its focus on efficiency, production processes, and quality control.

With a manufacturing company, the balance between cost, speed, and quality is crucial. Advances in technology, like automation and robotics, are transforming the manufacturing landscape, leading to increased productivity and new ways of production.

A manufacturing business often enters the international sector and often needs a unique legal structure to offer services across the globe. For example, a hybrid business could have manufacturing operations in Asia but mainly sell goods and services in the Americas – requiring a more intricate structure.

The Service Industry Explored

The service industry is all about delivering intangible value, be it through hospitality, banking, or education. Here, customer experience and service quality are paramount.

A service business relies heavily on human skills and interaction, although technology is playing a growing role in enhancing service delivery and customer engagement.

Service businesses need to provide customer-centered strategies for success – whether it be a small business owner or a large-scale established business.

Digital and Tech Businesses

In the digital and technological sector, innovation is the name of the game. This sector encompasses businesses that are at the forefront of technological advancements – think software companies, e-commerce platforms, and tech startups.

The pace of change here is rapid, with businesses continuously evolving to stay ahead in a highly competitive market. Success in this sector often hinges on the ability to anticipate and quickly adapt to technological shifts.

Agricultural and Resource-Based Industries

These industries are foundational, dealing with the production of raw materials like food, wood, and minerals.

They are crucial for sustaining life and other industries but are heavily dependent on natural factors like climate and geography. Sustainability and environmental impact are increasingly significant concerns in these sectors.

It encompasses a wide array of businesses that are owned, operated, and managed by individual private owners or corporations, rather than by the government or public entities. The private sector is known for its diversity, innovation, and contribution to economic growth.

Private Sector Industries

The private sector, comprising a diverse range of businesses owned and operated by individual entrepreneurs or corporations, stands in contrast to government-run entities.

This sector is a powerhouse of innovation and economic growth, driven by private ownership and management.

Integral to the economy, it spans multiple industries, each uniquely contributing to financial stability and job creation. These businesses are often for-profit organisations, influencing their agility, efficiency, and competitiveness in the marketplace.

Characterized by market-driven operations, the private sector adjusts swiftly to consumer demands and trends, shaping the landscape of goods and services available. Financial sustenance is primarily derived from private investments and revenue generation, emphasizing the importance of sound financial strategies and growth orientation.

Employment opportunities are abundant within this sector, covering a spectrum from manufacturing to tech-based services. Innovation and competition are at the heart of its ethos, spurred by the continuous quest to meet evolving customer needs and to stay ahead in the market race.

Yet, the private sector faces its own set of challenges, including market volatility, regulatory shifts, and the imperative for constant innovation. Just like with the public sector, its fortunes are often closely tied to the broader economic climate, making it sensitive to global economic shifts and trends.

Types of Business Entities: Understanding LLC, Limited Liability Partnership, and Sole Proprietorship

In the diverse world of business, the choice of business entity significantly impacts taxation, liability, and management structures. Three common types are Limited Liability Companies (LLC), Limited Liability Partnerships (LLP), and Sole Proprietorships. Each has distinct characteristics suited for different business needs.

Which business entity is right for you?

Limited Liability Company (LLC)

An LLC is a popular business structure that offers flexibility and protection. It combines the liability protection of a corporation with the tax efficiencies and operational flexibility of a partnership.

• Liability Protection : Owners of a limited liability company, known as members, are typically not personally liable for the business’s debts or liabilities. This protection is akin to that of a corporation, safeguarding personal assets like homes and savings.
• Taxation : A limited liability company can benefit from pass-through taxation, where the business income is not taxed at the company level but passed through to members’ personal income tax returns, avoiding the double taxation often seen in corporations.
• Management Flexibility : A limited liability company can offer flexibility in management. They can be managed by members (owner-managed) or by appointed managers (manager-managed), allowing for adaptability in operations and decision-making.
• Formation and Maintenance : Forming an LLC involves filing articles of organization with the state and drafting an operating agreement. While simpler than a corporation, it requires more formalities than a sole proprietorship.

Limited Liability Partnership (LLP)

An LLP is ideal for professional groups like lawyers, accountants, or consultants, offering a combination of partnership benefits with liability protection.

• Liability Protection : In an LLP, partners are not responsible for the malpractice of other partners, offering protection from joint liability. This does not cover personal negligence or misconduct.
• Taxation : Similar to LLCs, LLPs enjoy pass-through taxation, where income is reported on each partner’s personal tax returns, eliminating the corporate tax layer.
• Management Structure : In LLPs, partners have equal rights in management decisions, though roles can be defined differently in the partnership agreement.
• Suitability : LLPs are often restricted to certain professional services and may have varied regulations depending on the jurisdiction.

Sole Proprietorship

A sole proprietorship is the simplest and most common structure, owned and operated by one person. This type of business involves a single individual and this person is personally responsible for any debts occured.

• Ease of Setup and Low Cost : This form of business is straightforward to establish, often requiring no formal action other than necessary permits and licenses. It’s a low-cost option with minimal regulatory requirements.
• Personal Liability : The owner has unlimited personal liability for debts and obligations, as there is no legal separation between the owner and the business.
• Taxation : Earnings are reported on the owner’s personal income tax returns. This simplicity in taxation is one of the key attractions of this business model.
• Control and Decision-Making : The owner has complete control over decision-making processes but also bears all the responsibility for the business’s success or failure.

Choosing the Right Type

The choice between an LLC, LLP, and Sole Proprietorship depends on various factors, including the level of liability protection desired, tax implications, the nature of the business, capital needs, and the number of owners involved.

Businesses often start as sole proprietorships or partnerships and evolve into LLCs as they grow and seek more protection and structure. Consulting with legal and gaining professional advice can provide insights tailored to specific business needs and goals, ensuring the right structure for successful operations.

The Business Environment

The environment in which a business operates is a complex web of factors that can significantly impact its operations and strategies.

Competitive Landscape

Understanding the competitive landscape is key for any business. It involves analyzing competitors, market position, and industry trends. Staying competitive means continuously improving products or services, innovating, and understanding customer preferences.

Economic Influences

Economic factors like inflation, interest rates, and economic growth can greatly affect a business. These elements influence consumer spending, investment decisions, and overall business health.

A solid business plan must account for these economic variables and be flexible enough to adapt to changes.

Legal and Ethical Considerations

Businesses must navigate a web of legal requirements, from employment laws to environmental regulations. Moreover, ethical considerations are increasingly at the forefront of business operations.

Practices like fair trade, sustainable sourcing, and corporate social responsibility are not just legal requirements but also essential for building trust and maintaining a positive brand image.

Business Models and Strategies

In the landscape of business, the concepts of business models and strategies are like the blueprint and roadmap guiding a company’s journey. Understanding and innovating in these areas is key to business success.

Traditional vs. Modern Business Models

Traditional business models have long focused on brick-and-mortar operations, with value creation coming from physical goods or in-person services. But the modern business arena has expanded dramatically, embracing digital and online models.

This shift includes e-commerce platforms, subscription services, and freemium models, where basic services are provided free with premium features available at a cost. The transformation from traditional to modern models is not just about going digital; it’s a complete rethink of how value is delivered to customers.

Innovation in Business Strategy

Innovation in business strategy goes beyond new products or technologies; it’s about reimagining how a business operates and engages with its market. This includes exploring new marketing techniques, adopting sustainable practices, or even overhauling the supply chain for greater efficiency.

The digital age has opened new avenues for strategy, where data analytics and customer feedback loops can drastically improve business decisions and customer experiences.

Globalization and Business Nature

The reach of businesses today transcends local and national boundaries, stepping into the global arena. This shift has profound implications for how businesses operate and compete.

Navigating International Markets

Expanding into international markets is more than just selling products or services globally. It involves understanding diverse cultural nuances, complying with different legal environments, and adapting to varied economic conditions.

Businesses must be nimble and culturally aware to succeed in this global marketplace, often requiring a localized approach to marketing and operations to resonate with different audiences.

Cultural Impact on Business Practices

Culture deeply influences business practices. From decision-making processes to marketing campaigns, understanding and respecting cultural differences is vital.

This cultural awareness affects everything from negotiation styles to the design of products and services. As businesses go global, embracing and celebrating this diversity can become a significant strength, helping to forge deeper connections with customers and partners worldwide.

9. Technology’s Role in Shaping Business

The influence of technology on the business world is a tale of revolution and transformation. It’s about how tech has redefined not just the way businesses operate, but also how they think and strategize.

Digital Transformation

Digital transformation is a buzzword that captures the essence of technology’s impact on business. It’s not merely about adopting new tech tools; it’s a radical shift in business operations, culture, and customer engagement.

Businesses are leveraging cloud computing, big data analytics, and artificial intelligence to enhance efficiency, improve decision-making, and create personalized customer experiences. This transformation is not just a trend; it’s a fundamental change in how businesses exist and thrive in the digital age.

The Future of Business in the Tech Age

Looking ahead, the interplay between technology and business will continue to evolve. Technologies like blockchain, the Internet of Things (IoT), and quantum computing are poised to further revolutionize various sectors.

The future of business lies in embracing these technologies, adapting to their disruptions, and innovating continuously. This evolution isn’t just about survival; it’s about thriving in a tech-driven world.

Entrepreneurship and Start-up Culture

In the contemporary business landscape, entrepreneurship and start-up culture have become the heartbeats of innovation and economic growth.

From Idea to Execution

The journey from a spark of an idea to a successful business is a thrilling yet challenging path. It involves market research, business planning, securing funding, and relentless execution.

This process demands not just a great idea, but also the grit, adaptability, and resilience to navigate the ups and downs of start-up life. Entrepreneurship is about turning challenges into opportunities and ideas into realities.

Success Stories and Lessons Learned

Every successful start-up has a story, often filled with obstacles overcome and lessons learned. These narratives are rich with insights on perseverance, innovative thinking, and strategic pivoting.

By examining these stories, budding entrepreneurs can gain valuable knowledge and inspiration. These tales are not just about financial success; they’re about the passion, hard work, and creativity that drive the business world forward.

Challenges Facing Businesses Today

In today’s ever-changing business landscape, companies face a multitude of challenges that test their resilience, adaptability, and foresight.

Addressing Environmental Concerns

The growing urgency of environmental sustainability has put businesses in a critical position. They are increasingly expected to adopt eco-friendly practices, reduce carbon footprints, and contribute to sustainable development goals.

This shift not only involves rethinking operational processes but also aligning corporate values with environmental stewardship. Embracing these changes is not just a moral imperative but a business necessity, as consumers and stakeholders increasingly favor environmentally conscious companies.

Navigating Market Uncertainties

The business world is fraught with uncertainties arising from various factors like economic fluctuations, geopolitical tensions, and technological disruptions. These uncertainties can impact market trends, consumer behavior, and overall business stability.

Companies must develop robust risk management strategies and maintain agility to adapt to these unpredictable changes. Staying ahead in this volatile environment requires keen market insights, flexible business models, and an innovative mindset.

Real-World Examples of Diverse Businesses

Examining real-world examples offers invaluable insights into the practical application of business concepts and strategies.

Case Studies Across Industries

Exploring case studies from different industries sheds light on varied business models, strategies, and challenges. For instance, tech giants like Apple and Amazon demonstrate how innovation and customer-centric approaches drive success.

On the other hand, companies like Patagonia in the apparel industry show how commitment to sustainability can be a unique selling proposition. These case studies not only provide a learning platform but also inspire new ways of thinking and operating in business.

Lessons from Successful Enterprises

Analyzing the journeys of successful businesses reveals common threads of resilience, adaptability, and vision. Whether it’s a small start-up that scaled up or a legacy company that reinvented itself, there are lessons to be learned about navigating challenges, seizing opportunities, and staying true to core values.

These narratives are a rich source of knowledge and motivation for anyone looking to understand the intricacies of running a successful business in today’s dynamic world.

Conclusion: The Evolving Nature of Business

As we reach the conclusion of our exploration into the nature of business, it’s evident that the business landscape is not static but in a state of constant evolution. This dynamic environment is shaped by myriad factors, from technological advances and globalization to shifting market demands and environmental concerns.

The rise of digital technologies has revolutionized the way businesses operate, communicate, and market themselves. Globalization has expanded market reach but also introduced complex challenges such as cultural differences and international competition. Today’s businesses must navigate these waters with agility and foresight.

The modern business is no longer just a commercial entity; it’s a part of a larger societal and environmental system. With this comes the responsibility to operate ethically, sustainably, and with a greater focus on social impact. This shift in perspective is not just driven by regulatory demands but also by a growing awareness among consumers who seek to support businesses that align with their values.

Entrepreneurship and start-ups have added new dimensions to the business world, bringing innovation and fresh approaches to traditional industries. They remind us that at the heart of every successful business lies the courage to take risks, the vision to see opportunities where others see obstacles, and the tenacity to turn ideas into realities.

As we’ve seen through various examples across industries, successful businesses are those that can adapt to changes, foresee trends, and continuously evolve. Whether it’s a small local business or a multinational corporation, the ability to innovate and adapt is key.

In conclusion, the nature of business is multifaceted and ever-changing. It’s shaped by external forces and internal decisions. Businesses that understand and embrace this dynamic nature are better equipped to thrive in the unpredictable yet exciting world of commerce. As we move forward, the future of business looks both challenging and promising, filled with opportunities for those willing to innovate, adapt, and lead with purpose.

Submit a Comment Cancel reply

Your email address will not be published. Required fields are marked *

Submit Comment

Is Your Business Being Found Online?

Free Digital Marketing Report ($150 Value)

Customer Engagement and Relationship Building: Fostering Loyalty through Interactive Events

Optimizing your restaurant’s operations: from newsletter software to equipment acquisition, 7 game-changing steps to register your small business for marketing dominance, navigating the ai-driven transformation in marketing: a comprehensive guide, hiring an seo consultant in 2024 – a guide to success, google march algorithm updates: digital marketers need to know in 2024, six cost-effective tactics for boosting online visibility in 2024, most common types of animation (including traditional, 2d, 3d, stop motion), read more articles about business..

In today’s competitive landscape, businesses are constantly searching for innovative ways to foster loyalty among their customers.   One of the most effective strategies involves creating experiences that not only engage consumers but also build long-lasting...

Running a restaurant involves more than just creating a menu and serving food. It's about crafting a unique experience, engaging with customers, and managing operations seamlessly to ensure the best possible service. Technology and effective strategies are cornerstone...

You have a brilliant business idea. A product or service that will change lives, disrupt industries, and leave a lasting impact. But before you can unleash your vision upon the world, there's a crucial step you can't afford to overlook: properly registering your small...

Unveiling the Pillars of Sustainable Business Competitive Advantages

A competitive edge is vital for any business seeking long-term success and profits. In today's rapidly evolving marketplace, companies must identify and leverage unique advantages that set them apart from rivals. Sustainable competitive advantages are strengths that...

COD Affiliate Network: Expanding Opportunities with TerraLeads

  Affiliate programs are one of the popular ways to earn money online, whether pursued passively or actively. While there are numerous remote job opportunities available online, an increasing number of individuals are opting for traffic affiliate marketing. To...

How to Optimize Your Construction Business for Increased Revenue

  In today's competitive construction industry, optimizing your business for increased revenue is not just a desire but a necessity. With changing market dynamics and evolving customer expectations, staying ahead requires strategic planning and implementation....

How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated March 18, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information you need to cover in a business plan sometimes isn’t quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

If you’re looking for a free downloadable business plan template to get you started, download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

Free business plan templates and examples

Kickstart your business plan writing with one of our free business plan templates or recommended tools.

Free business plan template

Download a free SBA-approved business plan template built for small businesses and startups.

Download Template

One-page plan template

Download a free one-page plan template to write a useful business plan in as little as 30-minutes.

Sample business plan library

Explore over 500 real-world business plan examples from a wide variety of industries.

View Sample Plans

How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. 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 when applying for funding or pitching to investors. 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.

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.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most 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.

Lean Plan: The Lean Plan 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’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

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

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan
• Templates and examples

Related Articles

6 Min. Read

How to Write a Business Plan in Under an Hour

15 Min. Read

How to Write a Cannabis Business Plan + Free Sample Plan

11 Min. Read

How to Create a Sales Forecast

7 Min. Read

How to Write an Online Boutique Clothing Store Business Plan + Example Templates

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 .

Tax Season Savings

Get 40% off LivePlan

The #1 rated business plan software

Discover the world’s #1 plan building software

The 7 Best Business Plan Examples (2024)

As an aspiring entrepreneur gearing up to start your own business , you likely know the importance of drafting a business plan. However, you might not be entirely sure where to begin or what specific details to include. That’s where examining business plan examples can be beneficial. Sample business plans serve as real-world templates to help you craft your own plan with confidence. They also provide insight into the key sections that make up a business plan, as well as demonstrate how to structure and present your ideas effectively.

Start selling online now with Shopify

Example business plan

To understand how to write a business plan, let’s study an example structured using a seven-part template. Here’s a quick overview of those parts:

• Executive summary: A quick overview of your business and the contents of your business plan.
• Company description: More info about your company, its goals and mission, and why you started it in the first place.
• Market analysis: Research about the market and industry your business will operate in, including a competitive analysis about the companies you’ll be up against.
• Products and services: A detailed description of what you’ll be selling to your customers.
• Marketing plan: A strategic outline of how you plan to market and promote your business before, during, and after your company launches into the market.
• Logistics and operations plan: An explanation of the systems, processes, and tools that are needed to run your business in the background.
• Financial plan: A map of your short-term (and even long-term) financial goals and the costs to run the business. If you’re looking for funding, this is the place to discuss your request and needs.

7 business plan examples (section by section)

In this section, you’ll find hypothetical and real-world examples of each aspect of a business plan to show you how the whole thing comes together. 

• Executive summary

Your executive summary offers a high-level overview of the rest of your business plan. You’ll want to include a brief description of your company, market research, competitor analysis, and financial information. 

In this free business plan template, the executive summary is three paragraphs and occupies nearly half the page:

• Company description

You might go more in-depth with your company description and include the following sections:

• Nature of the business. Mention the general category of business you fall under. Are you a manufacturer, wholesaler, or retailer of your products?
• Background information. Talk about your past experiences and skills, and how you’ve combined them to fill in the market. 
• Business structure. This section outlines how you registered your company —as a corporation, sole proprietorship, LLC, or other business type.
• Industry. Which business sector do you operate in? The answer might be technology, merchandising, or another industry.
• Team. Whether you’re the sole full-time employee of your business or you have contractors to support your daily workflow, this is your chance to put them under the spotlight.

You can also repurpose your company description elsewhere, like on your About page, Instagram page, or other properties that ask for a boilerplate description of your business. Hair extensions brand Luxy Hair has a blurb on it’s About page that could easily be repurposed as a company description for its business plan. 

• Market analysis

Market analysis comprises research on product supply and demand, your target market, the competitive landscape, and industry trends. You might do a SWOT analysis to learn where you stand and identify market gaps that you could exploit to establish your footing. Here’s an example of a SWOT analysis for a hypothetical ecommerce business: 

You’ll also want to run a competitive analysis as part of the market analysis component of your business plan. This will show you who you’re up against and give you ideas on how to gain an edge over the competition. 

• Products and services

This part of your business plan describes your product or service, how it will be priced, and the ways it will compete against similar offerings in the market. Don’t go into too much detail here—a few lines are enough to introduce your item to the reader.

• Marketing plan

Potential investors will want to know how you’ll get the word out about your business. So it’s essential to build a marketing plan that highlights the promotion and customer acquisition strategies you’re planning to adopt. 

Most marketing plans focus on the four Ps: product, price, place, and promotion. However, it’s easier when you break it down by the different marketing channels . Mention how you intend to promote your business using blogs, email, social media, and word-of-mouth marketing. 

Here’s an example of a hypothetical marketing plan for a real estate website:

Logistics and operations

This section of your business plan provides information about your production, facilities, equipment, shipping and fulfillment, and inventory.

Financial plan

The financial plan (a.k.a. financial statement) offers a breakdown of your sales, revenue, expenses, profit, and other financial metrics. You’ll want to include all the numbers and concrete data to project your current and projected financial state.

In this business plan example, the financial statement for ecommerce brand Nature’s Candy includes forecasted revenue, expenses, and net profit in graphs.

It then goes deeper into the financials, citing:

• Funding needs
• Project cash-flow statement
• Project profit-and-loss statement
• Projected balance sheet

You can use Shopify’s financial plan template to create your own income statement, cash-flow statement, and balance sheet. 

Types of business plans (and what to write for each)

A one-page business plan is a pared down version of a standard business plan that’s easy for potential investors and partners to understand. You’ll want to include all of these sections, but make sure they’re abbreviated and summarized:

• Logistics and operations plan
• Financials 

A startup business plan is meant to secure outside funding for a new business. Typically, there’s a big focus on the financials, as well as other sections that help determine the viability of your business idea—market analysis, for example. Shopify has a great business plan template for startups that include all the below points:

• Market research: in depth
• Financials: in depth

Internal 

Your internal business plan acts as the enforcer of your company’s vision. It reminds your team of the long-term objective and keeps them strategically aligned toward the same goal. Be sure to include:

• Market research

Feasibility 

A feasibility business plan is essentially a feasibility study that helps you evaluate whether your product or idea is worthy of a full business plan. Include the following sections:

A strategic (or growth) business plan lays out your long-term vision and goals. This means your predictions stretch further into the future, and you aim for greater growth and revenue. While crafting this document, you use all the parts of a usual business plan but add more to each one:

• Products and services: for launch and expansion
• Market analysis: detailed analysis
• Marketing plan: detailed strategy
• Logistics and operations plan: detailed plan
• Financials: detailed projections

Free business plan templates

Now that you’re familiar with what’s included and how to format a business plan, let’s go over a few templates you can fill out or draw inspiration from.

Bplans’ free business plan template

Bplans’ free business plan template focuses a lot on the financial side of running a business. It has many pages just for your financial plan and statements. Once you fill it out, you’ll see exactly where your business stands financially and what you need to do to keep it on track or make it better.

PandaDoc’s free business plan template

PandaDoc’s free business plan template is detailed and guides you through every section, so you don’t have to figure everything out on your own. Filling it out, you’ll grasp the ins and outs of your business and how each part fits together. It’s also handy because it connects to PandaDoc’s e-signature for easy signing, ideal for businesses with partners or a board.

Miro’s Business Model Canvas Template

Miro’s Business Model Canvas Template helps you map out the essentials of your business, like partnerships, core activities, and what makes you different. It’s a collaborative tool for you and your team to learn how everything in your business is linked.

Better business planning equals better business outcomes

Building a business plan is key to establishing a clear direction and strategy for your venture. With a solid plan in hand, you’ll know what steps to take for achieving each of your business goals. Kickstart your business planning and set yourself up for success with a defined roadmap—utilizing the sample business plans above to inform your approach.

Business plan FAQ

What are the 3 main points of a business plan.

• Concept. Explain what your business does and the main idea behind it. This is where you tell people what you plan to achieve with your business.
• Contents. Explain what you’re selling or offering. Point out who you’re selling to and who else is selling something similar. This part concerns your products or services, who will buy them, and who you’re up against.
• Cash flow. Explain how money will move in and out of your business. Discuss the money you need to start and keep the business going, the costs of running your business, and how much money you expect to make.

How do I write a simple business plan?

To create a simple business plan, start with an executive summary that details your business vision and objectives. Follow this with a concise description of your company’s structure, your market analysis, and information about your products or services. Conclude your plan with financial projections that outline your expected revenue, expenses, and profitability.

What is the best format to write a business plan?

The optimal format for a business plan arranges your plan in a clear and structured way, helping potential investors get a quick grasp of what your business is about and what you aim to achieve. Always start with a summary of your plan and finish with the financial details or any extra information at the end.

Want to learn more?

• Question: Are You a Business Owner or an Entrepreneur?
• Bootstrapping a Business: 10 Tips to Help You Succeed
• Entrepreneurial Mindset: 20 Ways to Think Like an Entrepreneur
• 101+ Best Small Business Software Programs 

Oberlo uses cookies to provide necessary site functionality and improve your experience. By using our website, you agree to our privacy policy.

• school Campus Bookshelves
• menu_book Bookshelves
• perm_media Learning Objects
• login Login
• how_to_reg Request Instructor Account
• hub Instructor Commons
• Download Page (PDF)
• Download Full Book (PDF)
• Periodic Table
• Physics Constants
• Scientific Calculator
• Reference & Cite
• Tools expand_more
• Readability

selected template will load here

This action is not available.

1.1: Chapter 1 – Developing a Business Plan

• Last updated
• Save as PDF
• Page ID 21274

• Lee A. Swanson
• University of Saskatchewan

Learning Objectives

After completing this chapter, you will be able to

• Describe the purposes for business planning
• Describe common business planning principles
• Explain common business plan development guidelines and tools
• List and explain the elements of the business plan development process
• Explain the purposes of each element of the business plan development process
• Explain how applying the business plan development process can aid in developing a business plan that will meet entrepreneurs’ goals

This chapter describes the purposes, principles, and the general concepts and tools for business planning, and the process for developing a business plan.

Purposes for Developing Business Plans

Business plans are developed for both internal and external purposes. Internally, entrepreneurs develop business plans to help put the pieces of their business together. Externally, the most common purpose is to raise capital.

Internal Purposes

As the road map for a business’s development, the business plan

• Defines the vision for the company
• Establishes the company’s strategy
• Describes how the strategy will be implemented
• Provides a framework for analysis of key issues
• Provides a plan for the development of the business
• Helps the entrepreneur develop and measure critical success factors
• Helps the entrepreneur to be realistic and test theories

External Purposes

The business plan provides the most complete source of information for valuation of the business. Thus, it is often the main method of describing a company to external audiences such as potential sources for financing and key personnel being recruited. It should assist outside parties to understand the current status of the company, its opportunities, and its needs for resources such as capital and personnel.

Business Plan Development Principles

Hindle and Mainprize (2006) suggested that business plan writers must strive to effectively communicate their expectations about the nature of an uncertain future and to project credibility. The liabilities of newness make communicating the expected future of new ventures much more difficult than for existing businesses. Consequently, business plan writers should adhere to five specific communication principles .

First, business plans must be written to meet the expectations of targeted readers in terms of what they need to know to support the proposed business. They should also lay out the milestones that investors or other targeted readers need to know. Finally, writers must clearly outline the opportunity , the context within the proposed venture will operate (internal and external environment), and the business model (Hindle & Mainprize, 2006).

There are also five business plan credibility principles that writers should consider. Business plan writers should build and establish their credibility by highlighting important and relevant information about the venture team . Writers need to elaborate on the plans they outline in their document so that targeted readers have the information they need to assess the plan’s credibility. To build and establish credibility, they must integrate scenarios to show that the entrepreneur has made realistic assumptions and has effectively anticipated what the future holds for their proposed venture. Writers need to provide comprehensive and realistic financial links between all relevant components of the plan. Finally, they must outline the deal , or the value that targeted readers should expect to derive from their involvement with the venture (Hindle & Mainprize, 2006).

General Guidelines for Developing Business Plans

Many businesses must have a business plan to achieve their goals. Using a standard format helps the reader understand that the you have thought everything through, and that the returns justify the risk. The following are some basic guidelines for business plan development.

As You Write Your Business Plan

1. If appropriate, include nice, catchy, professional graphics on your title page to make it appealing to targeted readers, but don’t go overboard.

2. Bind your document so readers can go through it easily without it falling apart. You might use a three-ring binder, coil binding, or a similar method. Make sure the binding method you use does not obscure the information next to where it is bound.

3. Make certain all of your pages are ordered and numbered correctly.

4. The usual business plan convention is to number all major sections and subsections within your plan using the format as follows:

1. First main heading

1.1 First subheading under the first main heading

1.1.1. First sub-subheading under the first subheading

2. Second main heading

2.1 First subheading under the second main heading

Use the styles and references features in Word to automatically number and format your section titles and to generate your table of contents. Be sure that the last thing you do before printing your document is update your automatic numbering and automatically generated tables. If you fail to do this, your numbering may be incorrect.

5. Prior to submitting your plan, be 100% certain each of the following requirements are met:

• Everything must be completely integrated. The written part must say exactly the same thing as the financial part.
• All financial statements must be completely linked and valid. Make sure all of your balance sheets balance.
• Everything must be correct. There should be NO spelling, grammar, sentence structure, referencing, or calculation errors.
• Your document must be well organized and formatted. The layout you choose should make the document easy to read and comprehend. All of your diagrams, charts, statements, and other additions should be easy to find and be located in the parts of the plan best suited to them.
• In some cases it can strengthen your business plan to show some information in both text and table or figure formats. You should avoid unnecessary repetition , however, as it is usually unnecessary—and even damaging—to state the same thing more than once.
• You should include all the information necessary for readers to understand everything in your document.
• The terms you use in your plan should be clear and consistent. For example, the following statement in a business plan would leave a reader completely confused: “There is a shortage of 100,000 units with competitors currently producing 25,000. We can help fill this huge gap in demand with our capacity to produce 5,000 units.”

• Search Search Please fill out this field.

What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

• Search Search Please fill out this field.
• Building Your Business
• Becoming an Owner
• Business Plans

How To Write the Company Summary in a Business Plan

Company Overviews Show How the Pieces of a Business Work

What To Include in Your Company Summary

Getting started on your company summary, examples of a company summary, tips for writing a company summary, frequently asked questions (faqs).

Image by Theresa Chiechi © The Balance 2019

The company summary in a business plan —also known as the company description or overview—is a high-level look at what you are as a company and how all the elements of the business fit together.

An effective company summary should give readers, such as potential investors, a quick and easy way to understand your business, its products and services, its mission and goals, how it meets the needs of its target market, and how it stands out from competitors.

Before you begin writing your company summary, remember to stick to the big picture. Other sections of your business plan will provide the specific details of your business. The summary synthesizes all of that information into one page.

Key Takeaways

• The company summary in a business plan provides an overview containing a description of your company at a high level.
• A company summary might include your mission statement, goals, target market, products, and services, as well as how it stands out from competitors.
• The company summary can also be customized for a specific objective or audience, such as to secure financing from investors or banks.

The company summary section of a business plan should include:

• Business name
• Legal structure (i.e., sole proprietorship ,  LLC ,  S Corporation , or  partnership )
• Management team
• Mission statement
• Company history (when it started and important milestones)
• Description of products and services and how they meet the needs of the marketplace
• Target market (who will buy your product or services)
• Competitive advantage (what sets you apart in the marketplace to allow you to succeed)
• Objectives and goals (plans for growth)

The U.S. Small Business Administration (SBA) website has a lot of information available if you've never written a business plan before. The SBA provides examples of business plans for different types of companies.

Before you begin, you should decide whether you want to go with a traditional business plan format or a lean startup format. The traditional format is appropriate if you want to have a comprehensive, detail-oriented plan or if you are requesting financing. The lean startup format is best for those who have a relatively simple business and want to start it quickly or as a starting point for those who plan to refine and change the plan regularly.

No matter which type of business plan you choose, you'll need to include a company summary.

Although there are many blueprints for writing a company summary, below are a couple of examples to get you started.

Consulting Firm

You can opt for a concise opening paragraph such as this one:

XYZ Consulting is a new company that provides expertise in search marketing solutions for businesses worldwide, including website promotion, online advertising, and search engine optimization techniques to improve its clients' positioning in search engines. We cater to the higher education market, including colleges, universities, and professional educational institutions.

Several elements of the company summary are covered here, including the name (XYZ Consulting), history (new company), description of services (web promotion, SEO, advertising) and why it's needed (improve positioning in search engines), and the target market (higher education).

Starbucks Coffee Company Overview

Starbucks breaks down the company overview on their website into the following sections:

"Our Heritage"

Here the company describes how long the company has been in business, citing its roots, the founder, Howard Schultz, and how he was inspired to open the first Starbucks in Seattle after visiting Italy. It briefly mentions the growth of millions of customers and how the company's heritage remains important to its long-term success.

"Coffee & Craft"

The overview describes the high-quality products and services being offered and why they stand out from the competition by describing the detailed process of choosing and growing coffee beans. You'll notice they don't suggest their product is a low-cost product but instead provide a high level of "experiences to savor."

"Our Partners"

Starbucks describes its employees as partners that work together in an inclusive manner to achieve success. It highlights how they are at the center of the experience.

"Pursuit of Doing Good"

The company describes its values and how it gives back to the community.

Tesla Inc. Business Overview

Below are excerpts of the business overview pages from the annual 10-K filing on Dec. 31, 2021, for Tesla Inc.

"We design, develop, manufacture, sell and lease high-performance fully electric vehicles and energy generation and storage systems, and offer services related to our products. We generally sell our products directly to customers, including through our website and retail locations.

We also continue to grow our customer-facing infrastructure through a global network of vehicle service centers, mobile service technicians, body shops, supercharger stations and destination chargers to accelerate the widespread adoption of our products.

We emphasize performance, attractive styling and the safety of our users and workforce in the design and manufacture of our products and are continuing to develop full self-driving technology for improved safety.

Our mission to accelerate the world’s transition to sustainable energy, engineering expertise, vertically integrated business model and focus on user experience differentiate us from other companies."

Competition

Tesla highlights the competitive automotive market and how the company differentiates itself from the larger, more established competitors.

"The worldwide automotive market is highly competitive and we expect it will become even more competitive in the future as we introduce additional vehicles in a broader cross-section of the passenger and commercial vehicle market and expand our vehicles’ capabilities. We believe that our vehicles compete in the market both based on their traditional segment classification as well as based on their propulsion technology.

Competing products typically include internal combustion vehicles from more established automobile manufacturers; however, many established and new automobile manufacturers have entered or have announced plans to enter the market for electric and other alternative fuel vehicles."

Intellectual Property

The company highlights its intellectual property, including trademarks and patents.

"We place a strong emphasis on our innovative approach and proprietary designs which bring intrinsic value and uniqueness to our product portfolio. As part of our business, we seek to protect the underlying intellectual property rights of these innovations and designs such as with respect to patents, trademarks, copyrights, trade secrets and other measures, including through employee and third-party nondisclosure agreements and other contractual arrangements."

Mission Statement

The company highlights its mission statement and its sustainability goals using environmental, social, and governance (ESG) and human capital resources.

"The very purpose of Tesla's existence is to accelerate the world's transition to sustainable energy. We believe the world cannot reduce carbon emissions without addressing both energy generation and consumption, and we are designing and manufacturing a complete energy and transportation ecosystem to achieve this goal. As we expand, we are building each new factory to be more efficient and sustainably designed than the previous one, including with respect to waste reduction and water usage, and we are focused on reducing the carbon footprint of our supply chain."

There are other items you can include in your company summary to expand on the areas that you'd like people to focus on, depending on your objective.

You might provide more information about the company's location, legal structure, and management team. You can also include more information about the:

• Company's history, such as a family business that's been in operation for multiple generations
• Business objectives, including short-term and long-term goals
• Business strengths, highlighting anything that might give your company a competitive advantage in the field

You can also customize the summary if you have a specific objective or a targeted audience. For example, if the goal of your business plan is to secure funding, you might focus on areas that appeal to investors and lending institutions, including:

• Why you're the best person to manage the business
• Your experience in your field, as well as the total years of experience of your management team
• Expertise or special talents of your team, including training, licenses, certifications
• How you plan to make the business a success
• Financial information, such as a high-level discussion of your track record of revenue growth and the financial opportunities that can be realized as a result of securing financing

You may also want to address any areas of perceived weakness by explaining how you'll overcome them or compensate.

How do you write a company overview?

You might provide a description of the company, its location, legal structure, and management team. You can also highlight the company's business objectives, goals, and strengths. You can also customize the summary to a specific audience, such as a bank or lender, focusing on your competitive advantages and highlights of recent financial success.

What should an organizational overview include?

Some of the discussion points to include in a company overview might be:

• Company name and location
• Legal structure such as a sole proprietorship, LLC, or partnership
• Mission statement and management team
• Description of your products and services and how they are needed
• Target market or who are your customers
• Competitive advantage or what makes your company different

The Clute Institute. " Using Business Plans for Teaching Entrepreneurship ," Page 734.

U.S. Small Business Administration. " Write Your Business Plan ."

Starbucks Coffee Company. " Our Company ."

United States Securities and Exchange Commission. " Form 10-K, Annual Report Pursuant to Section 13 or 15(D) of the Securities Exchange Act of 1934 for the Fiscal Year Ended December 31, 2021, Tesla, Inc., " Pages 3-12.

• Create A Free Website
• Logo Design
• Marketing Bootcamp
• Plans & Pricing

Solo and Small Firm Marketing

Nature of business (what it is and what you must know).

The nature of business refers to the overall characteristics and features of a company’s operations, activities, and functions. It encompasses the type of products or services offered, the organizational structure, the target market, the competitive landscape, the level of risk, and the legal and regulatory framework. Understanding the nature of business is essential for entrepreneurs, investors, and stakeholders as it helps them make informed decisions, manage risks, and identify opportunities for growth.

What is Nature of Business?

The nature of business refers to the underlying essence or identity of a company that differentiates it from other businesses. It comprises the company’s mission, vision, values, goals, and strategies that guide its activities and operations. For instance, a company that specializes in producing eco-friendly products has a nature of business that prioritizes sustainability and environmental responsibility. Similarly, a company that offers high-end luxury products has a nature of business that emphasizes exclusivity and quality.

Nature of Business Definition

The definition of nature of business varies depending on the context and perspective. From a legal standpoint, the nature of business refers to the legal structure, ownership, and liability of a company. For example, a sole proprietorship has a nature of business that is different from a corporation or a partnership.

From a strategic perspective, the nature of business refers to the company’s unique value proposition, competitive advantage, and market position. For example, a company that specializes in innovative technology has a nature of business that emphasizes research and development, while a company that offers affordable products has a nature of business that emphasizes cost-effectiveness.

From a marketing perspective, the nature of business refers to the target market, customer needs, and preferences. For example, a company that targets the health-conscious consumers has a nature of business that emphasizes wellness and healthy living, while a company that targets the fashion-conscious consumers has a nature of business that emphasizes style and aesthetics.

Expert Opinion and Studies

According to a study conducted by the Harvard Business Review, the nature of business is a critical factor in determining a company’s success. The study found that companies that have a clear and well-defined nature of business, mission, and values outperformed their peers in terms of revenue growth, customer loyalty, and employee satisfaction.

Another study conducted by the McKinsey Global Institute found that companies that align their nature of business with the megatrends, such as technological innovation, demographic shifts, and urbanization, are more likely to succeed in the long run.

Furthermore, according to the Small Business Administration, understanding the nature of business is crucial for entrepreneurs as it helps them identify the target market, assess the competition, and develop effective marketing strategies. The SBA recommends that entrepreneurs conduct a thorough market analysis, identify their unique value proposition, and develop a clear business plan that outlines their nature of business.

The nature of business is a critical aspect of any company’s success. It encompasses the company’s mission, vision, values, goals, strategies, legal structure, target market, competitive landscape, and level of risk. Understanding the nature of business is essential for entrepreneurs, investors, and stakeholders as it helps them make informed decisions, manage risks, and identify opportunities for growth. Companies that have a clear and well-defined nature of business are more likely to succeed in the long run.

The nature of business categories refers to the different types of businesses that exist based on various characteristics such as size, ownership, legal structure, industry, and target market. Understanding the different nature of business categories is essential for entrepreneurs, investors, and stakeholders as it helps them identify the opportunities and challenges of each type and determine the most suitable approach for their goals.

Nature of Business Types

• Sole Proprietorship: This is the simplest and most common form of business, where an individual owns and operates the business. The owner is personally liable for the business’s debts and obligations, and the business’s profits and losses are reported on the owner’s personal tax return. Sole proprietorships are prevalent in small businesses such as freelancers, consultants, and home-based businesses.
• Partnership: This is a business where two or more individuals share ownership and management of the business. Partnerships can be general or limited, depending on the extent of each partner’s liability and involvement. Partnerships are prevalent in professional services such as law, accounting, and medicine.
• Limited Liability Company (LLC): This is a hybrid form of business that combines the benefits of both partnerships and corporations. LLCs offer limited liability protection to the owners and can choose to be taxed as a partnership or a corporation. LLCs are prevalent in real estate, investment, and consulting businesses.
• Corporation: This is a legal entity that is separate from its owners, and it can issue stocks and bonds to raise capital. Corporations offer limited liability protection to the owners, and the profits and losses are reported on the corporation’s tax return. Corporations are prevalent in large businesses such as manufacturing, technology, and retail.

Organization Type

• Functional Organization: This is a type of organizational structure where the company is divided into functional departments such as marketing, finance, and operations. Each department has its own set of goals and responsibilities, and they work together to achieve the company’s overall objectives. Functional organizations are prevalent in large corporations and government agencies.
• Divisional Organization: This is a type of organizational structure where the company is divided into semi-autonomous units, each responsible for a specific product, service, or geographic region. Each division has its own set of goals and strategies, and they are accountable for their own profits and losses. Divisional organizations are prevalent in multinational corporations and conglomerates.
• Matrix Organization: This is a type of organizational structure that combines both functional and divisional structures. The company is divided into cross-functional teams that are responsible for specific projects or products, and they report to both the functional departments and the divisional managers. Matrix organizations are prevalent in industries that require collaboration and innovation, such as technology and healthcare.

According to a study conducted by the Small Business Administration, sole proprietorships and partnerships are the most prevalent types of small businesses in the United States, accounting for over 70% of all businesses.

Another study conducted by the National Bureau of Economic Research found that corporations are the most prevalent type of business in high-growth industries such as technology, healthcare, and finance.

Furthermore, according to a survey conducted by Deloitte, matrix organizations are becoming increasingly popular among businesses that require flexibility, innovation, and cross-functional collaboration. The survey found that 67% of businesses are using or considering a matrix structure.

Business classification is the process of categorizing businesses based on various characteristics such as size, industry, ownership, legal structure, and product or service offering. Understanding business classification is important for entrepreneurs, investors, and stakeholders as it helps them identify opportunities and risks associated with different types of businesses. In this article, we will explore the different types of business classification, provide examples of each type, and discuss the nature of service businesses.

Business Classification Types

• Size: Businesses can be classified based on their size, measured by factors such as revenue, assets, and number of employees. Small businesses are those with fewer than 500 employees, while large businesses have over 500 employees. Medium-sized businesses fall between these two categories. Examples of small businesses include mom-and-pop stores, restaurants, and consulting firms. Large businesses include multinational corporations such as Apple, Walmart, and Amazon.
• Industry: Businesses can also be classified based on the industry they operate in, such as manufacturing, technology, healthcare, and retail. Each industry has its own set of regulations, challenges, and opportunities. For example, manufacturing businesses produce goods such as cars, electronics, and clothing. Technology businesses develop and sell software, hardware, and telecommunications services.
• Legal Structure: Businesses can be classified based on their legal structure, such as sole proprietorships, partnerships, corporations, and limited liability companies (LLCs). Each legal structure has its own set of regulations, tax implications, and liability protection. For example, a sole proprietorship is a business owned and operated by one person, while a corporation is a separate legal entity owned by shareholders.

Nature of Business Examples

• Product-based Business: This type of business focuses on producing and selling physical goods such as clothing, furniture, and electronics. Examples of product-based businesses include Nike, Ikea, and Samsung.
• Service-based Business: This type of business focuses on providing intangible services such as consulting, education, and healthcare. Examples of service-based businesses include law firms, hospitals, and online education platforms.
• Hybrid Business: This type of business offers both products and services, such as a restaurant that provides food and beverage services while also selling branded merchandise. Other examples include theme parks, spas, and hotels.

Nature of Service Businesses

A service business is a type of business that provides intangible services to customers. Service businesses can be classified based on the type of service they provide, such as professional services, personal services, and business services.

Professional services include businesses that provide specialized knowledge and expertise to clients, such as accounting firms, law firms, and management consulting firms . These businesses typically require a high degree of education and certification.

Personal services include businesses that provide services to individuals, such as healthcare services, beauty salons, and personal training services. These businesses focus on improving the well-being and quality of life of their clients.

Business services include businesses that provide services to other businesses, such as advertising agencies, IT consulting firms, and logistics companies. These businesses help other businesses improve their operations and competitiveness.

According to a report by the Bureau of Labor Statistics, service businesses account for over 80% of jobs in the United States, highlighting the importance of the service sector to the economy.

A study conducted by the Harvard Business Review found that service businesses are more likely to succeed than product-based businesses. The study attributed this to the fact that service businesses have lower upfront costs, greater flexibility, and a higher potential for repeat business.

Another study conducted by the Small Business Administration found that service businesses are more likely to be home-based and run by women, minorities, and older entrepreneurs than product-based businesses.

Businesses can be broadly classified into two categories based on their operations – merchandising businesses and manufacturing businesses. While merchandising businesses deal with buying and selling of goods, manufacturing businesses involve producing goods from raw materials. In this article, we will explore these two categories in detail, provide examples of each type, and discuss their unique characteristics.

Merchandising Business

A merchandising business is a type of business that buys finished products from manufacturers or wholesalers and then resells them to customers at a markup. The main goal of a merchandising business is to make a profit by selling goods at a higher price than they bought them for.

Merchandising businesses can be further classified based on the type of goods they sell. Some of the common types of merchandising businesses include:

• Retailers: Retailers are businesses that sell products directly to customers. They can operate in physical stores or online. Some examples of retailers include Walmart, Target, and Amazon.
• Wholesalers: Wholesalers are businesses that sell products in large quantities to other businesses. They act as intermediaries between manufacturers and retailers. Some examples of wholesalers include Sysco, Uline, and Costco.
• Distributors: Distributors are businesses that buy products from manufacturers and then sell them to retailers or wholesalers. They typically have exclusive distribution rights for a particular product or brand. Some examples of distributors include Coca-Cola Enterprises, PepsiCo, and Nestle.

Merchandising businesses have some unique characteristics that distinguish them from manufacturing businesses. For example:

• Lower production costs: Merchandising businesses do not have to bear the cost of producing goods from raw materials, which can be quite high. Instead, they buy finished products at a lower price and sell them at a markup.
• Faster inventory turnover: Merchandising businesses have a faster inventory turnover rate since they sell products that are already finished. This means that they can quickly replenish their stock and respond to changing market trends.
• Higher competition: Since merchandising businesses deal with finished products, they face higher competition from other businesses selling similar products. This means that they have to constantly innovate and improve their offerings to stay ahead of the competition.

Manufacturing Business

A manufacturing business is a type of business that transforms raw materials into finished goods that are sold to customers. The main goal of a manufacturing business is to make a profit by selling goods at a higher price than the cost of production.

Manufacturing businesses can be further classified based on the type of goods they produce. Some of the common types of manufacturing businesses include:

• Process Manufacturing: Process manufacturing involves the production of products through chemical or biological processes. Some examples of process manufacturing include the production of pharmaceuticals, food products, and chemicals.
• Discrete Manufacturing: Discrete manufacturing involves the production of distinct products that can be easily counted and tracked. Some examples of discrete manufacturing include the production of automobiles, furniture, and electronics.
• Job Shop Manufacturing: Job shop manufacturing involves the production of customized products that are tailored to the customer’s specifications. Some examples of job shop manufacturing include the production of custom machinery, tools, and parts.

Manufacturing businesses have some unique characteristics that distinguish them from merchandising businesses. For example:

• Higher production costs: Manufacturing businesses have to bear the cost of producing goods from raw materials, which can be quite high. This includes costs such as labor, equipment, and materials.
• Slower inventory turnover: Manufacturing businesses have a slower inventory turnover rate since they have to produce goods from scratch. This means that they may take longer to replenish their stock and respond to changing market trends.
• Higher control over product quality: Since manufacturing businesses produce goods from raw materials, they have greater control over the quality of the finished product. They can ensure that each product meets their quality standards and make adjustments to the production process as needed.

I am a UI/UX designer for Flatfull where i focus on Web applications, Mobile apps...

Get Your Weekly Marketing Plan

Recent tweets.

Wellcome @Drew Wllon and play this web application template, have fun1

Morbi nec @Jonathan George nunc condimentum ipsum dolor sit amet, consectetur

@Josh Long Vestibulum ullamcorper sodales nisi nec adipiscing elit. Morbi id neque quam. Aliquam sollicitudin venenatis

11.4 The Business Plan

Learning objectives.

By the end of this section, you will be able to:

• Describe the different purposes of a business plan
• Describe and develop the components of a brief business plan
• Describe and develop the components of a full business plan

Unlike the brief or lean formats introduced so far, the business plan is a formal document used for the long-range planning of a company’s operation. It typically includes background information, financial information, and a summary of the business. Investors nearly always request a formal business plan because it is an integral part of their evaluation of whether to invest in a company. Although nothing in business is permanent, a business plan typically has components that are more “set in stone” than a business model canvas , which is more commonly used as a first step in the planning process and throughout the early stages of a nascent business. A business plan is likely to describe the business and industry, market strategies, sales potential, and competitive analysis, as well as the company’s long-term goals and objectives. An in-depth formal business plan would follow at later stages after various iterations to business model canvases. The business plan usually projects financial data over a three-year period and is typically required by banks or other investors to secure funding. The business plan is a roadmap for the company to follow over multiple years.

Some entrepreneurs prefer to use the canvas process instead of the business plan, whereas others use a shorter version of the business plan, submitting it to investors after several iterations. There are also entrepreneurs who use the business plan earlier in the entrepreneurial process, either preceding or concurrently with a canvas. For instance, Chris Guillebeau has a one-page business plan template in his book The $100 Startup . 48 His version is basically an extension of a napkin sketch without the detail of a full business plan. As you progress, you can also consider a brief business plan (about two pages)—if you want to support a rapid business launch—and/or a standard business plan.

As with many aspects of entrepreneurship, there are no clear hard and fast rules to achieving entrepreneurial success. You may encounter different people who want different things (canvas, summary, full business plan), and you also have flexibility in following whatever tool works best for you. Like the canvas, the various versions of the business plan are tools that will aid you in your entrepreneurial endeavor.

Business Plan Overview

Most business plans have several distinct sections ( Figure 11.16 ). The business plan can range from a few pages to twenty-five pages or more, depending on the purpose and the intended audience. For our discussion, we’ll describe a brief business plan and a standard business plan. If you are able to successfully design a business model canvas, then you will have the structure for developing a clear business plan that you can submit for financial consideration.

Both types of business plans aim at providing a picture and roadmap to follow from conception to creation. If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept.

The full business plan is aimed at executing the vision concept, dealing with the proverbial devil in the details. Developing a full business plan will assist those of you who need a more detailed and structured roadmap, or those of you with little to no background in business. The business planning process includes the business model, a feasibility analysis, and a full business plan, which we will discuss later in this section. Next, we explore how a business plan can meet several different needs.

Purposes of a Business Plan

A business plan can serve many different purposes—some internal, others external. As we discussed previously, you can use a business plan as an internal early planning device, an extension of a napkin sketch, and as a follow-up to one of the canvas tools. A business plan can be an organizational roadmap , that is, an internal planning tool and working plan that you can apply to your business in order to reach your desired goals over the course of several years. The business plan should be written by the owners of the venture, since it forces a firsthand examination of the business operations and allows them to focus on areas that need improvement.

Refer to the business venture throughout the document. Generally speaking, a business plan should not be written in the first person.

A major external purpose for the business plan is as an investment tool that outlines financial projections, becoming a document designed to attract investors. In many instances, a business plan can complement a formal investor’s pitch. In this context, the business plan is a presentation plan, intended for an outside audience that may or may not be familiar with your industry, your business, and your competitors.

You can also use your business plan as a contingency plan by outlining some “what-if” scenarios and exploring how you might respond if these scenarios unfold. Pretty Young Professional launched in November 2010 as an online resource to guide an emerging generation of female leaders. The site focused on recent female college graduates and current students searching for professional roles and those in their first professional roles. It was founded by four friends who were coworkers at the global consultancy firm McKinsey. But after positions and equity were decided among them, fundamental differences of opinion about the direction of the business emerged between two factions, according to the cofounder and former CEO Kathryn Minshew . “I think, naively, we assumed that if we kicked the can down the road on some of those things, we’d be able to sort them out,” Minshew said. Minshew went on to found a different professional site, The Muse , and took much of the editorial team of Pretty Young Professional with her. 49 Whereas greater planning potentially could have prevented the early demise of Pretty Young Professional, a change in planning led to overnight success for Joshua Esnard and The Cut Buddy team. Esnard invented and patented the plastic hair template that he was selling online out of his Fort Lauderdale garage while working a full-time job at Broward College and running a side business. Esnard had hundreds of boxes of Cut Buddies sitting in his home when he changed his marketing plan to enlist companies specializing in making videos go viral. It worked so well that a promotional video for the product garnered 8 million views in hours. The Cut Buddy sold over 4,000 products in a few hours when Esnard only had hundreds remaining. Demand greatly exceeded his supply, so Esnard had to scramble to increase manufacturing and offered customers two-for-one deals to make up for delays. This led to selling 55,000 units, generating $700,000 in sales in 2017. 50 After appearing on Shark Tank and landing a deal with Daymond John that gave the “shark” a 20-percent equity stake in return for $300,000, The Cut Buddy has added new distribution channels to include retail sales along with online commerce. Changing one aspect of a business plan—the marketing plan—yielded success for The Cut Buddy.

Link to Learning

Watch this video of Cut Buddy’s founder, Joshua Esnard, telling his company’s story to learn more.

If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept. This version is used to interest potential investors, employees, and other stakeholders, and will include a financial summary “box,” but it must have a disclaimer, and the founder/entrepreneur may need to have the people who receive it sign a nondisclosure agreement (NDA) . The full business plan is aimed at executing the vision concept, providing supporting details, and would be required by financial institutions and others as they formally become stakeholders in the venture. Both are aimed at providing a picture and roadmap to go from conception to creation.

Types of Business Plans

The brief business plan is similar to an extended executive summary from the full business plan. This concise document provides a broad overview of your entrepreneurial concept, your team members, how and why you will execute on your plans, and why you are the ones to do so. You can think of a brief business plan as a scene setter or—since we began this chapter with a film reference—as a trailer to the full movie. The brief business plan is the commercial equivalent to a trailer for Field of Dreams , whereas the full plan is the full-length movie equivalent.

Brief Business Plan or Executive Summary

As the name implies, the brief business plan or executive summary summarizes key elements of the entire business plan, such as the business concept, financial features, and current business position. The executive summary version of the business plan is your opportunity to broadly articulate the overall concept and vision of the company for yourself, for prospective investors, and for current and future employees.

A typical executive summary is generally no longer than a page, but because the brief business plan is essentially an extended executive summary, the executive summary section is vital. This is the “ask” to an investor. You should begin by clearly stating what you are asking for in the summary.

In the business concept phase, you’ll describe the business, its product, and its markets. Describe the customer segment it serves and why your company will hold a competitive advantage. This section may align roughly with the customer segments and value-proposition segments of a canvas.

Next, highlight the important financial features, including sales, profits, cash flows, and return on investment. Like the financial portion of a feasibility analysis, the financial analysis component of a business plan may typically include items like a twelve-month profit and loss projection, a three- or four-year profit and loss projection, a cash-flow projection, a projected balance sheet, and a breakeven calculation. You can explore a feasibility study and financial projections in more depth in the formal business plan. Here, you want to focus on the big picture of your numbers and what they mean.

The current business position section can furnish relevant information about you and your team members and the company at large. This is your opportunity to tell the story of how you formed the company, to describe its legal status (form of operation), and to list the principal players. In one part of the extended executive summary, you can cover your reasons for starting the business: Here is an opportunity to clearly define the needs you think you can meet and perhaps get into the pains and gains of customers. You also can provide a summary of the overall strategic direction in which you intend to take the company. Describe the company’s mission, vision, goals and objectives, overall business model, and value proposition.

Rice University’s Student Business Plan Competition, one of the largest and overall best-regarded graduate school business-plan competitions (see Telling Your Entrepreneurial Story and Pitching the Idea ), requires an executive summary of up to five pages to apply. 51 , 52 Its suggested sections are shown in Table 11.2 .

Are You Ready?

Create a brief business plan.

Fill out a canvas of your choosing for a well-known startup: Uber, Netflix, Dropbox, Etsy, Airbnb, Bird/Lime, Warby Parker, or any of the companies featured throughout this chapter or one of your choice. Then create a brief business plan for that business. See if you can find a version of the company’s actual executive summary, business plan, or canvas. Compare and contrast your vision with what the company has articulated.

• These companies are well established but is there a component of what you charted that you would advise the company to change to ensure future viability?
• Map out a contingency plan for a “what-if” scenario if one key aspect of the company or the environment it operates in were drastically is altered?

Full Business Plan

Even full business plans can vary in length, scale, and scope. Rice University sets a ten-page cap on business plans submitted for the full competition. The IndUS Entrepreneurs , one of the largest global networks of entrepreneurs, also holds business plan competitions for students through its Tie Young Entrepreneurs program. In contrast, business plans submitted for that competition can usually be up to twenty-five pages. These are just two examples. Some components may differ slightly; common elements are typically found in a formal business plan outline. The next section will provide sample components of a full business plan for a fictional business.

Executive Summary

The executive summary should provide an overview of your business with key points and issues. Because the summary is intended to summarize the entire document, it is most helpful to write this section last, even though it comes first in sequence. The writing in this section should be especially concise. Readers should be able to understand your needs and capabilities at first glance. The section should tell the reader what you want and your “ask” should be explicitly stated in the summary.

Describe your business, its product or service, and the intended customers. Explain what will be sold, who it will be sold to, and what competitive advantages the business has. Table 11.3 shows a sample executive summary for the fictional company La Vida Lola.

Business Description

This section describes the industry, your product, and the business and success factors. It should provide a current outlook as well as future trends and developments. You also should address your company’s mission, vision, goals, and objectives. Summarize your overall strategic direction, your reasons for starting the business, a description of your products and services, your business model, and your company’s value proposition. Consider including the Standard Industrial Classification/North American Industry Classification System (SIC/NAICS) code to specify the industry and insure correct identification. The industry extends beyond where the business is located and operates, and should include national and global dynamics. Table 11.4 shows a sample business description for La Vida Lola.

Industry Analysis and Market Strategies

Here you should define your market in terms of size, structure, growth prospects, trends, and sales potential. You’ll want to include your TAM and forecast the SAM . (Both these terms are discussed in Conducting a Feasibility Analysis .) This is a place to address market segmentation strategies by geography, customer attributes, or product orientation. Describe your positioning relative to your competitors’ in terms of pricing, distribution, promotion plan, and sales potential. Table 11.5 shows an example industry analysis and market strategy for La Vida Lola.

Competitive Analysis

The competitive analysis is a statement of the business strategy as it relates to the competition. You want to be able to identify who are your major competitors and assess what are their market shares, markets served, strategies employed, and expected response to entry? You likely want to conduct a classic SWOT analysis (Strengths Weaknesses Opportunities Threats) and complete a competitive-strength grid or competitive matrix. Outline your company’s competitive strengths relative to those of the competition in regard to product, distribution, pricing, promotion, and advertising. What are your company’s competitive advantages and their likely impacts on its success? The key is to construct it properly for the relevant features/benefits (by weight, according to customers) and how the startup compares to incumbents. The competitive matrix should show clearly how and why the startup has a clear (if not currently measurable) competitive advantage. Some common features in the example include price, benefits, quality, type of features, locations, and distribution/sales. Sample templates are shown in Figure 11.17 and Figure 11.18 . A competitive analysis helps you create a marketing strategy that will identify assets or skills that your competitors are lacking so you can plan to fill those gaps, giving you a distinct competitive advantage. When creating a competitor analysis, it is important to focus on the key features and elements that matter to customers, rather than focusing too heavily on the entrepreneur’s idea and desires.

Operations and Management Plan

In this section, outline how you will manage your company. Describe its organizational structure. Here you can address the form of ownership and, if warranted, include an organizational chart/structure. Highlight the backgrounds, experiences, qualifications, areas of expertise, and roles of members of the management team. This is also the place to mention any other stakeholders, such as a board of directors or advisory board(s), and their relevant relationship to the founder, experience and value to help make the venture successful, and professional service firms providing management support, such as accounting services and legal counsel.

Table 11.6 shows a sample operations and management plan for La Vida Lola.

Marketing Plan

Here you should outline and describe an effective overall marketing strategy for your venture, providing details regarding pricing, promotion, advertising, distribution, media usage, public relations, and a digital presence. Fully describe your sales management plan and the composition of your sales force, along with a comprehensive and detailed budget for the marketing plan. Table 11.7 shows a sample marketing plan for La Vida Lola.

Financial Plan

A financial plan seeks to forecast revenue and expenses; project a financial narrative; and estimate project costs, valuations, and cash flow projections. This section should present an accurate, realistic, and achievable financial plan for your venture (see Entrepreneurial Finance and Accounting for detailed discussions about conducting these projections). Include sales forecasts and income projections, pro forma financial statements ( Building the Entrepreneurial Dream Team , a breakeven analysis, and a capital budget. Identify your possible sources of financing (discussed in Conducting a Feasibility Analysis ). Figure 11.19 shows a template of cash-flow needs for La Vida Lola.

Entrepreneur In Action

Laughing man coffee.

Hugh Jackman ( Figure 11.20 ) may best be known for portraying a comic-book superhero who used his mutant abilities to protect the world from villains. But the Wolverine actor is also working to make the planet a better place for real, not through adamantium claws but through social entrepreneurship.

A love of java jolted Jackman into action in 2009, when he traveled to Ethiopia with a Christian humanitarian group to shoot a documentary about the impact of fair-trade certification on coffee growers there. He decided to launch a business and follow in the footsteps of the late Paul Newman, another famous actor turned philanthropist via food ventures.

Jackman launched Laughing Man Coffee two years later; he sold the line to Keurig in 2015. One Laughing Man Coffee café in New York continues to operate independently, investing its proceeds into charitable programs that support better housing, health, and educational initiatives within fair-trade farming communities. 55 Although the New York location is the only café, the coffee brand is still distributed, with Keurig donating an undisclosed portion of Laughing Man proceeds to those causes (whereas Jackman donates all his profits). The company initially donated its profits to World Vision, the Christian humanitarian group Jackman accompanied in 2009. In 2017, it created the Laughing Man Foundation to be more active with its money management and distribution.

• You be the entrepreneur. If you were Jackman, would you have sold the company to Keurig? Why or why not?
• Would you have started the Laughing Man Foundation?
• What else can Jackman do to aid fair-trade practices for coffee growers?

What Can You Do?

Textbooks for change.

Founded in 2014, Textbooks for Change uses a cross-compensation model, in which one customer segment pays for a product or service, and the profit from that revenue is used to provide the same product or service to another, underserved segment. Textbooks for Change partners with student organizations to collect used college textbooks, some of which are re-sold while others are donated to students in need at underserved universities across the globe. The organization has reused or recycled 250,000 textbooks, providing 220,000 students with access through seven campus partners in East Africa. This B-corp social enterprise tackles a problem and offers a solution that is directly relevant to college students like yourself. Have you observed a problem on your college campus or other campuses that is not being served properly? Could it result in a social enterprise?

Work It Out

Franchisee set out.

A franchisee of East Coast Wings, a chain with dozens of restaurants in the United States, has decided to part ways with the chain. The new store will feature the same basic sports-bar-and-restaurant concept and serve the same basic foods: chicken wings, burgers, sandwiches, and the like. The new restaurant can’t rely on the same distributors and suppliers. A new business plan is needed.

• What steps should the new restaurant take to create a new business plan?
• Should it attempt to serve the same customers? Why or why not?

This New York Times video, “An Unlikely Business Plan,” describes entrepreneurial resurgence in Detroit, Michigan.

• 48 Chris Guillebeau. The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future . New York: Crown Business/Random House, 2012.
• 49 Jonathan Chan. “What These 4 Startup Case Studies Can Teach You about Failure.” Foundr.com . July 12, 2015. https://foundr.com/4-startup-case-studies-failure/
• 50 Amy Feldman. “Inventor of the Cut Buddy Paid YouTubers to Spark Sales. He Wasn’t Ready for a Video to Go Viral.” Forbes. February 15, 2017. https://www.forbes.com/sites/forbestreptalks/2017/02/15/inventor-of-the-cut-buddy-paid-youtubers-to-spark-sales-he-wasnt-ready-for-a-video-to-go-viral/#3eb540ce798a
• 51 Jennifer Post. “National Business Plan Competitions for Entrepreneurs.” Business News Daily . August 30, 2018. https://www.businessnewsdaily.com/6902-business-plan-competitions-entrepreneurs.html
• 52 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition . March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf
• 53 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition. March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf; Based on 2019 RBPC Competition Rules and Format April 4–6, 2019. https://rbpc.rice.edu/sites/g/files/bxs806/f/2019-RBPC-Competition-Rules%20-Format.pdf
• 54 Foodstart. http://foodstart.com
• 55 “Hugh Jackman Journey to Starting a Social Enterprise Coffee Company.” Giving Compass. April 8, 2018. https://givingcompass.org/article/hugh-jackman-journey-to-starting-a-social-enterprise-coffee-company/

As an Amazon Associate we earn from qualifying purchases.

This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's permission.

Want to cite, share, or modify this book? This book uses the Creative Commons Attribution License and you must attribute OpenStax.

Access for free at https://openstax.org/books/entrepreneurship/pages/1-introduction

• Authors: Michael Laverty, Chris Littel
• Publisher/website: OpenStax
• Book title: Entrepreneurship
• Publication date: Jan 16, 2020
• Location: Houston, Texas
• Book URL: https://openstax.org/books/entrepreneurship/pages/1-introduction
• Section URL: https://openstax.org/books/entrepreneurship/pages/11-4-the-business-plan

© Jan 4, 2024 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.

The Nature of Business: Everything You Need to Know

• Post author: HICAPS
• Reading time: 25 mins read

This post talks about the nature of business, what is nature of business, nature of business meaning, and example of nature of business.

A business is an organization or enterprising entity engaging in commercial, industrial, or professional activity. The nature of business can be for-profit, non-profit, or others (more about this later). 

Moreover, businesses can range in size from small to huge. They can also range in scale from sole proprietorships to multinational organizations.

But what is the nature of business? Why is it important? 

Let’s find out.

What Is Nature of Business: Nature of Business Meaning

So what is nature of business meaning?

The term nature of business meaning pertains to different things to different people.

Generlly, the nature of business describes what the company offers to its clients and the industry. It also describes the legal structure or any other distinguishing characteristics of the business. 

For example, if one says that the nature of business is private, it usually implies the company’s money-making nature. 

Similarly, when one says the nature of business is manufacturing, the company focuses on manufacturing operations.

Additionally, when the nature of business is a corporation, it means that the company has a big reach. 

The nature of business also refers to the structured technique of describing a company. This idea describes the type of business. It also describes the services it provides. 

Moreover, the nature of business meaning describes what a company addresses. It describes the major focus of the company’s goods or services. Such also incorporates everything a firm does to achieve its objectives.

Entrepreneurs, investors, and lenders analyze the nature of financial statements. They do this to determine whether a firm is feasible before investing in it. They want to know about the company’s prospects for success first. This lets them choose whether or not it will be a worthwhile investment. 

Because this documentation also involves finance, nature of business meaning statements may be required. Moreover, the said statement should thoroughly address the following elements of the business:

Regular Process

This separates businesses from hobbies. Businesses have procedures that repeat themselves to get the same outcome. As a result, people receive a product or service. The owner then earns money.

Economic Activity

The primary purpose of any firm is to make money.

For a product or service to be helpful to customers, it must be given at the proper time and place, solve a problem, or meet a demand. Goods that are not available to consumers, for whatever reason, are useless.

Capital Requirement

To put it another way, people need money to make money. These are required for the production of a product or the provision of a service that generates revenue.

Did you know that you can get a loan for small business from the government ?

Goods and Services

Every company provides something to the people. 

Some businesses manufacture tangible things like clothing or automobiles. Others offer intangible services like computer repair.

Anticipated Risk

All require some level of time and financial effort. A business owner will gain money on occasion and lose money sometimes. 

When it comes to business, there’s always the possibility of losing money. Some risks are also more prevalent in certain areas than others.

Profit-Earning Motive

Profit is the primary motivation for beginning a business.

When customers express a want or need, businesses respond by providing a product or service to match that need.

Involvement From the Buyer and Seller

The customer buys something and the company sells something in every transaction.

Social Obligations

Businesses have an influence on their surrounding areas. 

They recruit people and develop partnerships with other businesses. These companies also assist communities by providing a needed product or service. They may also give back to the community through charitable endeavors or enrichment programs.

A statement about the nature of a business should also indicate what problem the firm will tackle. 

Read Other HICAPS Business Articles

• Insurance for Small Business: Definition, Types, and Cost
• What is a Lawyer for Business? Do You Need One?
• Starting A Bakery Business In the Philippines
• How To Tell If A Baking Business Is Doing Well: 7 Big Signs
• 5 Powerful Sales Strategies to Turn Cold Leads into Loyal Clients
• 12 Small Business Ideas Philippines
• 7 Importance of Website for Small Business Success
• History of Baking: What You Need to Know

Types of Nature of Business 

Here are the types of nature of business:

Public Sector

This sector is made up of government and government-controlled businesses. The Department of Health (DOH) and the British Broadcasting Corporation (BBC) are two examples. 

Private Sector

This sector includes for-profit firms that operate privately. They work individually or collectively.

HICAPS and Gardenia Wheat Bread are two examples.

International Sector

This sector includes exports from foreign countries. Examples are McDonald’s and Coca-Cola.

Technological Sector

This industry is concerned with the creation, of tech products. They also develop and distribute them. Apple Inc. and Microsoft Corporation are two examples.

Sole Proprietorship

Businesses run by a single individual fall under this category. The owner and the company entity have no legal difference. Local restaurants and grocery stores are two examples.

Partnership

Businesses operated by two or more persons under a formal agreement fall into this category. 

Microsoft and Apple are two examples. These companies began as collaborations.

Corporation

This sector includes huge corporations or a collection of corporations working as one. Amazon and JP Morgan Chase are two examples.

Limited Liability Company

An LLC involves a business structure. Here, proprietors are not personally accountable for the company’s debts or liabilities.

Limited Liability Partnership

An LLP means that all partners have limited responsibility to the company. Brake Bros Ltd and Virgin Atlantic are two examples.

For-Profit Organizations

Businesses in this category make a profit. These companies operate privately. 

Non-profit Organizations

Such organizations use the funds they get to further their social cause. 

Example of Nature of Business

To further understand the concept, you must know at least an example of nature of business. Let’s look at the example of nature of business: 

Example of Nature of Business 1: Service Business

Think about how many times you have paid someone to do something for you. 

Perhaps you paid someone to paint your house, replace your car’s oil, or make your dinner at a restaurant. You most likely paid someone to perform these things because you lacked the time or ability to do them yourself. 

Maybe you didn’t feel like doing it on your own. So, you decided it was better to hire someone else to do it instead.

Cafes or Restaurants , auto service shops, and other similar establishments are all service-based enterprises. Every day, they meet the needs of thousands of customers. 

Service businesses will prosper as long as we have limited time and knowledge. They also work because people do not enjoy doing things themselves.

Moreover, the service industry comprises companies that provide customers with intangible goods. They serve their clients by offering professional advice, skills, and knowledge. 

These include professional services (accounting, legal, taxes, programming, etc.), personal services (laundry, cleaning, etc.), public services (recreational parks, fitness centers, banks, etc.), and many more. 

Example of Nature of Business 2: Merchandising Business

A merchandising business, often known as a merchandiser, is one of the most common sorts of companies. We benefit from them on a daily basis. 

In general, a merchandising enterprise buys finished goods and resells them to customers. 

Recall the last time you went shopping for food, home goods, or personal stuff. You were most likely getting them from a merchandiser. 

In particular, the products were bought wholesale from a distributor or manufacturer. Then they got sold to you through that retailer. 

While the retailer may have been compelled to buy in bulk, they provide the goods to you in a modest, personal-use way. 

For example, a wholesaler may sell baking supplies to a retail store at a significant discount. However, the store will be required to purchase hundreds, if not thousands, of units. This must be done so they qualify for the discount. 

The merchandiser then sells you the deodorant at full retail price. They also permit you to buy one container. 

The difference between what you paid the retailer and what the shop paid the wholesaler becomes the store’s profit. Profits enable the store to stay in business. It also lets them continue to provide you with items in the future.

The manufacturing industry includes companies that purchase things at wholesale costs. Then, they resell them at retail prices. These include stores selling clothes, medicines, and appliances. 

Example of Nature of Business 3: Manufacturing Business

Even if you don’t buy directly from them, many things you consume on a daily basis come from a manufacturing company. 

Take a look around your house or apartment. The television you’re watching, the phone next to you, and the computer you’re using right now were all constructed and developed by a manufacturing firm.

This sort of company is also responsible for the tires on your automobile and the picture frame on your wall.

In particular, a manufacturing company used components, pieces, or raw materials to create a finished product. These final products can be sold directly to customers or to other manufacturing companies for use in the production of another product. 

Manufacturing firms in today’s world often need machines, tools (e.g. kitchen tools and equipment ). They also use robots, computers, and human labor. These components work together to generate a product.

A manufacturing company also has an assembly line. In this, the product gets assembled from one workstation to the next. By moving the product down an assembly line, the completed product gets assembled faster and with less manual work.

It’s also worth noting that in other sectors, the manufacturing process is referred to as fabrication.

Manufacturers include food factories and car companies They also include baking business with bakery logos . These brands use baking ingredients to make cakes. 

Example of Nature of Business 4: Hybrid Business

This industry includes companies that do the things mentioned above. 

A vehicle manufacturer, for example, sells automobiles. They also buy old cars. Then, they resell them for a greater price after repairs. These companies also provide repairs for broken cars. 

Frequently Asked Questions

A business’ nature specifies what kind of firm it is and what its goals are. It describes a company’s legal structure and industry. Nature also includes goods or services. In short, it describes verything it does to achieve its objectives. It also represents the company’s problem as well as its services.

Natural resources, labor (human resources), capital, and entrepreneurship are the four classical components of production shared by all economic activity. Many experts now consider knowledge to be the fifth component, recognizing its importance in company success.

Here are the types of nature of business: Government sector Military sector International sector Private sector Technology sector Merchandising sector Service sector Manufacturing sector

More Questions with Answers

The three nature of business includes the goods or services that must be designed in a certain way. They must generate form utility. This means they must convert products into consumable forms. The products or services must also have time utility. This involves making the goods and services available when needed. Lastly, they must generate place utility. This describes the availability of goods or services wherever needed by the consumers.

The following aspects determine the nature of business: Regular process. The profit-generating processes are regularly repeated. Economic activity. The activities that maximize profit. Utility creation. A kind of utility the goods or services create for the consumer, such as time utility, place utility, etc. Capital requirement. The amount of funding required for the business. Goods or services. The types of goods (tangible or intangible) offered by the business. Risk. The risk factors related to the business. Profit earning motive. The businesses’ profit-earning motive. Satisfaction of consumers’ needs. The goods or services are based on the consumers’ satisfaction. Buyers and sellers. The type of buyers and sellers involved in the business. Social obligations. All businesses have corporate social responsibilities to undertake .

The nature of a business specifies what it is and what it does.

Nature of businesses may be determined according to the way they operate and their goals. It can also be determined by their organizational structure, profit orientation, and what they provide. 

If you’re planning to start a business, knowing the nature of business meaning helps. Doing so guides you in the right direction. As a result, you will have a thriving business. 

What do you think is the nature of your business? Are you a manufacturer, merchandiser, service provider, or all of the above? Let us know in the comment section below!

About HICAPS

Over the years, HICAPS has helped bakers and businesses make delicious products by offering ingredients like ChiffonAide Cake Oil , Magic Whizk Whipping Cream , Red Velvet Flavor Emulco , and Instabake Brownie Mix . 

HICAPS also provides tools and resources to valued partners such as the free “How to Increase Your Sales Amidst the Pandemic” E-book and free dealer locator that helps look for baking ingredients near me . 

Want more free tips and tutorials? Follow us on Facebook at Hicaps Mktg. Corp. and on YouTube at HicapsTV . 

Want to be one of our valued partners? Fill this form out. Looking forward to talking to you soon!  

Please Share This Share this content

• Opens in a new window X
• Opens in a new window Facebook
• Opens in a new window Pinterest
• Opens in a new window LinkedIn

You Might Also Like

Difference Between Dairy and Non Dairy Whipping Cream

Creative Gender Reveal Cakes for Your Party

Bold Cake Design for Men – Unique Styles & Ideas

Leave a reply cancel reply.

• Skip to primary navigation
• Skip to main content
• Skip to footer

How to Write a Business Plan [Complete Guide]

Last Updated on – Aug 8, 2023 @ 3:22 pm

Preparing to write your business plan? You’re already one step ahead of other entrepreneurs who don’t see its value.

A well-thought-out and well-written plan for starting and running your business helps you focus on what you need to do to make your business idea work. It can also boost your chance of getting investments and loans to finance your business .

Did you know that half of small businesses fail in their first four years? Planning is such a crucial step to reducing the risks of managing an enterprise. Turn your business idea from something abstract and uncertain into a successful venture. It starts with drafting a good business plan.

Here’s your definitive guide to writing a business plan that speaks for itself.

What is a Business Plan?

A business plan is a written document that details what a business is, what direction it will take, and how you’ll get it there.

Practically speaking, the business plan evaluates your business’ viability. As the Department of Trade and Industry (DTI) puts it , the document allows entrepreneurs to find out whether or not their business idea will bring in more money than how much it costs to start and run it.

More than just a document, the business plan helps business owners to figure out the key aspects of an enterprise, including the following:

• Business goals and strategies to meet them
• Competitive edge and how to leverage it
• Potential problems and how to solve them
• Funding required to start the business
• Equipment, facilities, and manpower needed for operations

Who Needs a Business Plan and What Is It Used For?

Every aspiring entrepreneur who will spend a great amount of money, time, and energy to earn a profit needs a business plan.

Business planning is a crucial part of starting an entrepreneurial journey, no matter how small or big a business is. Never skip this step—as they say, failing to plan is planning to fail.

Here are some examples of business types that benefit much from business planning:

Founders of startup businesses seek funds to begin their new venture. Business plans help them persuade investors and lenders to provide the funding they need.

For startups, a business plan explains the nature of the new venture, how it will achieve its goals, and why the founders are the best people to lead the company. The startup business plan should also specify the capital needed to jumpstart the new business.

Related: Fast-Growing Startups in the Philippines

Existing Businesses

Not only do startups gain advantage from a business plan—existing enterprises need it, too.

But business plans for growing businesses serve a different purpose. Usually, a business plan helps a middle-stage business raise funds for additional facilities, equipment, manpower, and others needed for expansion. This document also defines strategies for growth and allocates resources based on strategic priorities.

Growing businesses also use business plans to communicate their vision to various stakeholders such as customers, business partners, potential investors and lenders, employees, and suppliers.

For such needs, a business plan for existing businesses lays out the goals, strategies, metrics to evaluate success, responsibilities, and resource allocation.

Social Enterprises

Social enterprises may not be as profit-driven as other business types, but that doesn’t mean they need business planning any less.

A social enterprise needs to prepare a business plan to achieve its social objectives and keep empowering the communities it’s supporting. This document is what government agencies and donor agencies require and evaluate when approving grants for funding a social project .

A social enterprise business plan determines the social issue that a business idea will solve, its beneficiaries, products or services, target market, and sales projections, among many others.

Non-Profit Organizations/NGOs

Like social enterprises, non-governmental organizations (NGOs) can also use business plans to source funds for their campaigns and projects.

A nonprofit business plan discusses the problems an NGO is trying to solve through a certain project, as well as how it will do that and how much resources are needed.

It also helps the organization and its board members to prepare for risks by making projections on how likely the activities will push through and how the current sources of funds will continue to yield a certain level of revenue. Most importantly, the business plan defines the Plan B if the original plan ends up failing.

Business Plan Format and Its Components

How does a business plan exactly look like? There’s no recommended universal format for business plans. Ideally, yours is customized according to the nature of your business and what you’re going to use the plan for.

However, all business plans have sections in common. Here’s a quick walkthrough of the six components that make up a business plan.

1. Executive Summary

Like an abstract of a college thesis or a foreword of a book, the executive summary is meant to provide a brief overview of the document. It presents the highlights of a business plan in a page or two.

The executive summary the first thing that readers see, so keep it short yet engaging and compelling enough to make them want to view more details in your plan.

2. Company Profile

The company profile is your chance to introduce yourself and your business to people outside your company. It’s also called the company summary, company information, business description, and business profile.

This section quickly answers the five Ws and one H of your business: who, what, when, where, why, and how.

Think of it as your business calling card. Being the shortest section of the business plan, the company profile provides a quick overview of the business—who the owner and founder is, management team, business goals, business address, product or service, and what makes it unique.

3. Operations Plan

The operations plan explains how you’ll run your business, focusing on the different aspects of manufacturing your product. This section includes the following information, among many others:

• Type of business (sole proprietorship, partnership, corporation , or non-profit)
• How the product is made or the service completed
• Necessary materials, equipment, and facilities to manufacture the product or complete the service
• Any subcontractors needed
• Quality control system

4. Organizational Plan

Your people should play a major role in your business plan, just as how they’re important to your business success . The organizational plan includes a chart that shows how your company is structured according to key departments or functions such as administration, production/manufacturing, marketing, and finance. This organizational chart not only presents the levels of authority in a company but also clarifies who is responsible for which people and function.

Aside from the organizational chart, the organizational plan also includes these details:

• Number of employees to hire
• Responsibilities of each job role
• Qualifications of workers who will perform each role
• Salaries and benefits per job assignment

5. Marketing Plan

The marketing plan and the succeeding chapters are the heart and soul of your business plan, explaining the things that will make your business work. This section details how you plan to promote your product or service in the market.

Specifically, the marketing plan covers the following:

• How the product or service will work and how it will benefit customers
• Target market and its profile
• Strategies for packaging, advertising, public relations, and distribution
• Competitive advantage

6. Financial Plan

A critical section in your business plan, the financial plan helps you assess how much money you’ll need to start or grow your enterprise and identify your funding sources to get your business off the ground and sustain its operations. This is where you’ll provide financial estimates that cover at least one year of running your business.

Investors and lenders specifically look for these financial details in business plans:

• How much you’re going to borrow, what you’ll use the loan for, and how you’ll pay it back
• How much profit you’re expecting to make (through an income statement and balance sheet)
• How you can finance your business operations (through a cash flow statement)
• Whether to keep the business going or close it down to cut losses (through a break-even analysis)

Related: How to Write a Business Proposal

Should You Use a Business Plan Template?

Business plan templates identify what information to put into each section and how it should be structured.

They provide instructions to guide entrepreneurs through the process. This way, nothing is missed out while writing the plan.

Thus, using a business plan template is a great idea, especially if this is your first time to prepare a plan for starting or growing your enterprise.

Helpful as it as may be, a business plan template doesn’t make business planning 100% effortless. While it provides the outline that makes writing the plan easy and quick, you still need to do your homework.

For example, a template won’t compute the financial projections for you—it’s a task you have to complete either on your own or with the help of a professional.

So before you use a business plan template, manage your expectations first and be prepared to do a lot of math!

8 Free Business Plan Templates

Yes, you read it right—you can download free online business plan templates. Some of these templates are designed for a specific niche, while others offer sample business plans for a wide range of business categories and industries.

Start off by choosing any of these free templates that suit your business planning needs.

1. Business Plan Format by the DTI

DTI has a wealth of useful information for micro, small, and medium businesses in the Philippines. Of course, it’s free to access since it comes from the government.

On the DTI website, simply look for the Business Planning section and download the business plan format in a PDF file. This document not only lists down all the information to be included in every section of a business plan, but it also provides guide questions per section—making business planning easier for first-timers.

If you want a more detailed discussion of what should go into each component of your business plan plus sample scenarios, check the DTI’s Negosyo Center e-book that fleshes out things for small business owners.

2. Simple Business Plan Template by The Balance Small Business 

The Balance is an online resource for small business owners. It has a free business plan template that’s simple and easy to understand for beginners, with instructions on how to use it. Broken down into sections, the simple business plan template tells you what to include in each component of the plan.

Simply copy the free template and paste it into a word document or spreadsheet. From there, you can start drafting your business plan with the template as a guide.

3. Free Sample Business Plans by Bplans

This website features a collection of over 500 free business plan samples for various industries, including restaurants, e-commerce, real estate, services, nonprofit, and manufacturing.

Under each category are links to many sample business plans for specific types of business. Each sample comes with a plan outline, too. For example, under the Services category, you’ll find sample plans for businesses like auto repair shops, advertising agencies, catering companies, health spas, photography studios, and more.

4. Business Plan Samples by LivePlan

More than 500 free sample business plans are available at the LivePlan website, so you’re likely to find one that suits your business best. The samples allow users to know how other businesses structured and worded each component of their business plans. You can copy and paste the sections into your own plan.

To download a full business plan sample, you’ll have to sign up by submitting your name and email address through the website.

5. Business Plan Templates by PandaDoc

PandaDoc offers free business plan templates for NGOs, startups, restaurants, cafes, bakeries, hotels, and salons. These documents can be downloaded in PDF format.

But if you want a customizable template, you can download the PandaDoc template for a 14-day free trial. This template allows you to edit the document, choose a theme that matches your branding, and add pictures and videos.

The website also has free templates for executive summaries and business letters.

6. The One-Page Business Plan by The $100 Startup

If your business has a simple concept, then a one-page business plan template is ideal to use. This downloadable PDF file is a very simple outline made up of a few sections with questions that you have to answer in just a short sentence or two.

7. Business Plans by Microsoft

Microsoft provides a broad selection of templates for its users, including business plan templates in Word, business plan presentations in PowerPoint, and business plan checklists in Excel.

• Sample business plan template (Word) – Provides the steps in writing a complete business plan
• Business plan presentation template (PowerPoint) – Consists of slides for different sections of a business plan that highlight the key points for viewers
• Business plan checklist template (Excel) – Enumerates the important things to do when writing a business plan, using the Strength, Weakness, Opportunity, and Threat (SWOT) analysis framework

The advantage of using a template from Microsoft is having a professional-looking document, slideshow presentation, or spreadsheet. No need to do the formatting by yourself because the template is already formatted. All you have to do is enter the necessary information into the template to complete your business plan.

8. Social Business Plan Guidelines by the Ateneo de Manila

This free business plan format for social entrepreneurs comes from the Ateneo de Manila University’s John Gokongwei School of Management. In a glimpse, it provides the basic information you need to plan a social enterprise.

It also has more detailed business plan guidelines you can refer to. Simply click the link to the word document at the bottommost part of the page.

Related: 11 Best MBA Programs & Schools in the Philippines

How to Write a Business Plan

An outstanding business plan covers everything your stakeholders need to know about your business. So don’t just wing it—put a lot of thought into this critical document.

Let’s get down to the nitty-gritty of drafting a business plan, whether you’ll use a template or not.

1. Brainstorm about your business idea

You may have a very promising business idea, but it won’t fly unless you develop it into a clear-cut concept.

Brainstorm with your team about everything you can think of about starting and running the business. Then list them all down.

Be as creative as possible. No need to be too critical at this point.

While brainstorming, aim to answer these key questions:

• Why do you want to start the business? What has inspired you to go for it?
• What product or service do you plan to sell?
• Who will be your target customers? What are their problems that you’re hoping to solve through your product or service? How will you promote your offerings to them?
• What will be your business branding ? How will you position your brand in the industry?
• What is your competitive advantage? What makes your business unique?
• Where do you see your business within a year?

2. Validate your business idea

Research on the specifics of your business idea—paying special attention to your product or service, target market, and competitors.

According to entrepreneurship experts, it’s best to spend twice as much time on this step as spending the time to the actual drafting of the business plan.

Here are some ways to validate your business idea:

• Read studies and research to find information and trends about your industry .
• Conduct market research to gather insights from industry leaders, potential customers, and suppliers . You can do this through surveys, focus group discussions, and one-on-one interviews with your stakeholders.
• Collect data about your competitors , especially the product or service they offer and how they reach their customers. Consider buying from them or visiting their store to get a feel of their products and customer experience.

Gather all relevant information and analyze your findings to assess whether the business idea is feasible or not. You may need to tweak your business idea based on your evaluation of its feasibility.

3. Define the purpose of your business plan

It’s extremely difficult to carry out anything if you aren’t sure about why you’re doing it in the first place. Without a clear purpose, you’re like driving a car without knowing where you’re headed to.

When it comes to writing your business plan, you should have its purpose in mind from the get-go. It can be one or more of the following:

• Create a roadmap to provide the directions the business must take to achieve your goals and overcome challenges. This is ideal for bootstrapping or self-funding startups.
• Seek investments and loans to finance a business. If this is your purpose for making a business plan, it should be compelling enough to attract investors and lenders.
• Set your targets, budget, timelines, and milestones. When you put them all in writing, it’s so much easier to evaluate and measure your business’ actual performance versus your goals.
• Communicate your vision and strategic priorities with the management team. With this purpose, your business plan must establish specific goals for your managers so that they have something to commit to, you can track progress, and get them to follow through on their commitments. Also, having a business plan for this purpose ensures that everybody involved in running your business is on the same page.
• Minimize risks. Running a business in itself involves a lot of risks, and it gets riskier with a poorly researched business idea. A business plan can help entrepreneurs mitigate them by organizing activities and preparing for contingencies.

4. Create an outline for the executive summary

The first section of any business plan is the executive summary. You don’t have to draft it yet at this point, but it helps to write an outline for it before you proceed with the rest of the sections.

In a sentence or two, describe these key aspects of your business:

• Product or service
• Target market
• Competitors
• Unique value proposition (how you set your business apart from the competition)
• Management team
• Short-term and long-term business goals
• Possible sources of revenue

5. Describe your business

The next step is to write your company profile. Get your readers to become familiar with your business and realize why they should be interested in it.

If you have no idea what specifically goes into this crucial business plan section, you can check the company profiles of businesses in your industry. Usually, you can find them on their websites at the About Us or About the Company page. Take note of the information included and how they’re written.

Here are the must-haves of a great company profile:

• Brief history of the company
• Mission and vision
• Product or service lineup
• Target market and audience
• How the business will address the customers’ pain points
• What makes the business unique

6. Provide details about your operations and organizational structure

Anyone who will read your business plan needs to know what they should expect when they deal with you. They need to see a solid plan for your operations and the people who make up your team. So give your operations plan and organizational plan a careful thought.

For your operations plan, choose carefully the right legal structure for your business. Will you be a sole proprietor? Or will you partner with someone or form a corporation? Your choice will have an impact not only on your business operations but also on the taxes you’ll pay and your personal liability .  

As for the organizational plan, it’s where you put your organizational chart that shows a glimpse of the hierarchy within your organization. You can easily create this chart in Microsoft Word, Excel, or PowerPoint.

Also introduce the people who comprise your management team—their relevant experience, qualifications, and expertise . The organizational plan must also include information of the support personnel, as well as who reports to whom and who manages whom.

If you’ll be outsourcing some of your business functions, add them to your organizational plan, too. These may include consultants , accountants , lawyers , logistics specialists, and IT specialists. This way, you’re showing that you’re planning to fill in any expertise and skill gaps in your in-house team.

Also Read: Business Process Outsourcing to the Philippines [Complete Guide]

7. Compose your marketing plan

Make this section of your business plan as comprehensive and detailed as possible. You’d want to prove that you’ll take a strategic and aggressive approach to reach your target customers and promote your brand and product or service to them.

Divide your marketing plan into five subsections: objectives, product/service description, target market profile, competition profile, and promotional activities.

A. Objectives

Zero in on the what and the why of your marketing activities. Under the marketing objectives section, list down all your goals and the strategies you’ll implement to meet them.

Your marketing goals can be any of the following:

• Raise brand awareness
• Introduce a new product or service
• Regain or get more customers for an existing product or service
• Secure long-term contracts with your ideal clients
• Increase sales in a certain market, product, or price point
• Improve product manufacturing or product/service delivery
• Increase prices without affecting sales

B. Product/Service Description

Describe each product or service you’ll offer, including its features and benefits. You can use storytelling , images, charts, tables, or any visual element that best illustrates how each item will work to the benefit of your target customers.

C. Target Market Profile

Present as much relevant data as you can about your potential customers. Make sure to include the following:

• Demographic profile: age range, gender, income level, education, interests, etc.
• Buying behaviors
• Factors that influence their buying decisions: purchasing power, personal preferences, economic conditions, marketing campaigns, social factors (such as peer pressure and social media influencers ), cultural factors, etc.

D. Competition Profile

Your marketing plan must focus not only on your own business but also those of your competitors. List down the similar products or services that they offer to your target customers.

Also, provide an assessment of your competitors’ performance. Which areas are they doing well? How can you improve on their strengths and weaknesses? How can your business stand out? Is it your more competitive pricing? Better customer service? Superior product quality?

To come up with a good competition profile, take the time to research about your competitors. When interviewing your target customers, ask them about the brands they use or businesses they deal with.

You can also do an online search of your competitors. For example, if you’ll run a pet supplies store in Pasig, search for “pet stores Pasig” on Google. The search engine results page may show you the different stores that sell the same products as the ones you plan to offer. Read customer reviews online to get deeper insights on how these businesses serve their clients.

Consider doing a “secret shopping” in your competitor’s store. This way, you can experience firsthand how they treat their customers and how they market and sell their products or services. You might even be able to get information about their product lineup and pricing.

E. Promotional Activities

The last subsection of your marketing plan must discuss how you’ll promote your brand and products or services and connect with customers. Also, be ready to allocate budget for each marketing activity you identify in your plan.

Create a list of marketing activities you plan to implement. Will you reach your audience through SEO (organic online search), paid advertising, and/or social media? Or will you go the traditional route through print and TV advertising or joining expos, exhibits, and trade shows? The right choice depends on the nature of your business and the type of audience you’re trying to reach.

8. Develop your financial plan

The financial plan is the section where you’ll crunch the numbers. Unless you’re really good at math, it’s best to hire an accountant or business consultant who will work with you to develop a foolproof financial plan.

Put simply, a financial plan explains how a business will spend money and make more money. It also estimates the amount of time it will take for the business to earn a profit.

Here are the specifics of a good financial plan:

• Total capital requirement
• Business financing plan and any loan requirement
• Collateral to put up for a business loan
• Schedule for loan repayment
• Financial statements : cash flow statement, income statement/profit and loss statement, and balance sheet
• Break-even analysis
• Return on investment (ROI)
• Financial analysis

Ultimately, these financial projections answer the question, “Is your business financially feasible?”

9. Back up your business plan with supporting documents

Books and theses have an appendix section at the end that provides additional resources. Your business plan should have one, too. This final section consists of documents, surveys, studies, charts, tables, images, and other elements that provide supporting data.

Depending on the information you’ve presented in the other sections of the plan, your appendix may include these things:

• Market research data and findings
• Resumes of the management team
• Relevant financial documents
• Lease agreements
• Bank statements
• Licenses and permits

10. Review and refine your business plan

Your business plan is almost done at this point. Now all you have to do is go over the document once more to ensure you’ve covered everything and nothing crucial is left out.

Check your final draft and be sure it has the following:

• Sound business idea – If you’ve done Step 2 properly (validating business idea), you can be confident that you have a sound business idea.
• Comprehensive and in-depth look into your business in a professional format
• Thorough understanding of your target customers , their behaviors, interests, and needs
• Competent management team – The people who make up your team must possess the skills and expertise that complement yours.
• Business focus or specialization

Aside from yourself, ask a business partner, proofreader, and accountant or financial expert to review your business plan and spot any errors and inconsistencies. You’d want to make sure that it looks professional and is accurate.

11. Write the executive summary

Lastly, get back to the outline you created in Step 4 and write it based on your final draft. Make sure to craft an engaging executive summary that hooks people into reading the rest of the plan.

6 Actionable Tips on Writing a Business Plan

Anyone can write a business plan—but it takes more than great writing skills to create an exceptional one.

Here are some tips to help you prepare an effective business plan that goes beyond the ordinary.

1. Write with your audience in mind

When drafting your business plan, you’re writing not for yourself but for people who will play key roles in starting and running your enterprise. This is why it’s important that you know whom you’re writing for and keep them in mind while preparing your business plan.

If you think you can’t create a plan that caters to all your audience groups, consider having different versions of the document. For example, you can come up with a business plan for investors, another for lenders, one for employees, and so on. But keep the data consistent across all versions.

To write a business plan that suits a particular audience, you have to use the right language, highlight the parts that interest them, and adjust the format accordingly.

A. Use the Right Language

One of the most important rules in business writing: use the language that your target audience easily understands. If you’re writing for engineers, finance people, or lawyers, your language can be technical—meaning you can use jargons and terminologies familiar to them.

However, if you’re writing for investors who barely have technical knowledge, tweak your language in simple terms that are easy to grasp and appreciate.

Likewise, if you’re writing a business plan to communicate internally with managers and employees your company’s direction and strategies, it’s best to use more casual language than you would when writing for high-level, external stakeholders.

B. Appeal to Your Audience’s Interests

It also helps to understand what interests your audience because they will influence how you’ll write your business plan.

Your management team, for instance, will be interested in knowing your business goals and strategies so that they can help you steer the company in the right direction.

Investors and lenders look at the business plan differently—they’ll be more interested in your financial statements to determine your financial health, like if your business is worth investing in or has the ability to pay back a loan.

C. Adopt a Suitable Business Plan Format

There’s no one-size-fits-all format for business plans because it depends mainly on your audience, aside from the nature of your business.

Let’s say you’ll set up a restaurant, and you’re drafting a business plan to apply for a business loan. To convince lenders that your business is viable, details such as your restaurant’s location and possible renovations are crucial.

Meanwhile, if you’re writing the plan for potential big-time investors, you’ll take a different approach. A good restaurant business plan focuses on the business aspects that will lead to growth and profitability (Remember that investors are interested in how they’ll make money from partnering with you).

2. Keep it concise

How long should a business plan be? According to the U.S. Small Business Administration (SBA) , it depends on various factors such as the specific audience it’s written for and the nature of a business. The SBA cites surveys that found the ideal length to be at least 25 to 100 pages.

Sounds a lot? If you have a simple business idea and you’re writing a business plan for busy people who don’t have time to pore over hundreds of pages, then one page up to 20 pages should be fine.

However, you may need to provide more explanation (which will take up more pages in your business plan) if you’re planning to build a new kind of business, and a risky one at that.

The size of your business also affects the length of your business plan. Business plans for small businesses need not exceed 30 pages. Corporate business plans are expected to be longer.

What matters more than length is how concise your business plan is. Meaning, it provides all the necessary information—including solid research and analysis—using the fewest words possible. No place for wordiness here!

3. Document everything related to your business

Support your claims in the business plan with solid facts and proof. Investors, for instance, need an assurance that they won’t lose their investment when they trust you with their money. This is where documenting your business thoroughly plays a crucial role.

What kinds of documentation can you include in your business plan?

• Industry forecast or projections
• Licensing agreements
• Location strategy
• Prototype of your product or service
• Survey and FGD results
• Resumes of your management team

4. Show your passion and dedication to your business

Although business plans have straightforward, matter-of-fact content, you can still establish an emotional connection with your readers through your plan. After all, your readers are humans with feelings and motivations.

No need to be dramatic about it—you can show your passion and dedication while still sounding professional in your business plan. Write about the mistakes you’ve had (like a failed business in the past), what you’ve learned from the experience, the values you hold, and the problems of your customers you want to solve through your product or service.

5. Know your competition and how you’ll stand out

Your business won’t be the single player in your industry. Other businesses in the same niche have started way ahead of you, and some new ones will also compete for business in the future.

Write your business plan in such a way that you know your competitors so well. Identify all of them and what makes your business unique compared with the rest without belittling them.

6. Be realistic and conservative in all your estimates

In any aspect of your business, it’s better to underpromise and overdeliver than the other way around. This also holds true when writing a business plan. You wouldn’t want to set unrealistic expectations that will lead to disappointments and worse, losses, when you fail to deliver on your promise.

There’s no place for too much optimism in your business plan. Your budget allocation, timelines, capital requirements, sales and revenue targets, and financial projections must be reasonable, realistic, and conservative. These will lend credibility to your business plan and yourself as an entrepreneur. Because there are a lot of factors beyond your control, always assume that things will get completed longer and cost more ( consider inflation over time! ).

This is where your research prior to writing the draft comes extremely helpful. You have something solid and factual to benchmark against. For example, if your analysis based on the facts you’ve gathered indicates that you’ll be able to get 40% share off the market in your first year of operations, consider making your estimates a bit more conservative and attainable.

Related: The Ultimate Guide to Business Valuation in the Philippines

10 Mistakes to Avoid When Writing a Business Plan

Now, let’s explore the mistakes entrepreneurs often commit when writing a business plan. Listing them all down here to let you know what to avoid.

1. Prioritizing Form Over Substance

Spend most of your time and energy on building solid research and facts rather than obsessing about which font type or background color will look best for your document.

2. Overthinking

Many entrepreneurs take too long to complete their business plans because they worry too much about it. Don’t get intimidated by business planning—you don’t have to be an expert or a degree holder in business management or business administration to be able to write an outstanding business plan. Overthinking will just lead to analysis paralysis and get nothing done.

As long as you know your business well and are passionate about it, then writing a business plan won’t be as difficult as you think, especially if you’re using a template.

3. Submitting the Document Without Proofreading It

If your business plan is filled with typos and grammatical errors, readers will get distracted even if you’re presenting substantial information. It may also give your audience an impression that you’re careless—and who wants to deal with a person who isn’t professional and careful enough?

Even if it costs you money, pay a professional proofreader to check your work and correct any errors so that the message you wanted to convey through your business plan will get across.

4. Making Empty Claims

Any statement that isn’t sufficiently supported by solid research or documentation has to go. For example, if you want to claim to be the top player in your industry but you don’t have any evidence to back it up, rethink about including it in your business plan.

5. Writing an Overly Long and Wordy Plan

Make sure that everything you put into your business plan is relevant and serves your purpose. Otherwise, remove unnecessary statements that just add fluff to the document.

Also, don’t waste your readers’ time by using too many words—including highfalutin ones. Remember, your goal is to make your audience understand your business, not to impress them with beautiful or complex prose.

6. Using Too Many Superlatives

Even if you really feel that your business, business idea, or projection is incredible, amazing, the best, great, fantastic, or one of a kind, avoid using these superlatives because they aren’t appropriate for formal documents like a business plan.

7. Doing the Financial Projections on Your Own

Unless you’re an accountant yourself, it’s best that you get a professional to do the job for you. It will save you time and the headache of dealing with numbers and formatting your financial plan properly.

8. Overestimating Your Projections

The business plan is not a place to make impossible promises—while they look good on paper, you might run into trouble fulfilling them. To avoid this mistake, always do your research. Find out how other businesses do it and what the typical timeframes and financial projections are before you come up with your estimates.

9. Long-Term Business Planning

As much as possible, limit your projections to only a year. A lot of things can happen and make your business different from how you initially planned it. Stick with your short-term or one-year targets and estimates, then just tweak your business plan as time goes by.

10. Including Unfounded Rumors About Your Competitors

Not only do rumors make your business plan look unprofessional, but they also distract your readers from your intended message, which is to highlight what makes your business different from the competition. Avoid including details based only on hearsay. Everything in your plan must be backed up by solid, quantifiable facts.

Key Takeaway

A business plan is more than just a document that you prepare once and will never look at again. Rather, it’s a strategic tool that you should use from time to time to guide your business operations, get the buy-in of your stakeholders, and grow your business over time.

Once you’re done with writing your business plan, make the most of it for your business. Use it and modify it as often as needed!

Ready and confident to start writing your business plan? Share your thoughts and questions below!

Other Useful Business Resources from Grit PH:

• How to Sell a Business in the Philippines

About Venus Zoleta

Venus Zoleta is an experienced writer and editor, specializing in personal finance and digital marketing.

She has been a regular columnist for some of the biggest business & finance publications in the Philippines, such as MoneyMax.ph and Filipiknow.net.

Hoping to retire early, she started investing and bought a home in her early 20s. This crazy cat mom eats ramen like there's no tomorrow.

Education: University of the Philippines (B.A. Journalism) Focus: Personal Finance, Personal Development, and Entrepreneurship

Reader Interactions

March 3, 2020 at 10:00 am

I like it, and i want to learn more about for business

March 6, 2020 at 9:46 am

Hello Ms. Venus, Rise Against Hunger Philippines, N.G.O. , branching out into a new high ways… and i am newly hired as a social enterprise development officer… whose main tasks to launch a product line; an up-cycled tarpaulin bags.. manufactured by a group of community women (skills training’s, coordinated by life coached; aiming w-holistic transformation and sustainability program.. . with such a big tasks, i need a step by step guides, and if possible a coach for i cannot do it alone… thank you, henry reandino chua

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

We need your help!

Our team is currently conducting research for an upcoming guide focusing on starting a business in the Philippines . We would greatly appreciate your contribution, which should only require a few seconds of your time. 

Thank you in advance!

• Digital Marketing
• Search Engine Optimization (SEO)
• Digital PR & Link Building
• Social Media Marketing
• Digital Advertising (PPC & Social)
• Content Marketing
• Copywriting
• Email Marketing
• Conversion Optimization
• Web/App Development
• Ecommerce Development

Please enable JavaScript in your browser to complete this form. Name * Location of Business * Number of Employees * 1 - 10 11 -50 51 - 100 100 - 500 500+ Phone Number * Email * Insurance Company Standard Insurance AXA Philippines BDO AIG Submit

Please enable JavaScript in your browser to complete this form. Full Name * Company Name * Mobile Number * Email Address * Submit

Please enable JavaScript in your browser to complete this form. Name * Contact Number * Email Address * Target Location Preferred Developer * Ayala Land SM Prime Megaworld Alveo Land DMCI Homes Federal Land Robinsons Land Corp Vista Land and Lifescapes Filinvest Land Shang Properties Century Properties Empire East Rockwell Land Comment Submit

Disclosure: Your personal details will not be shared with any third-party companies. We’ll just need your contact details so our resident real estate agents can reach you to provide you with the details for any of the listed property developments you’re interested to invest in.

Please enable JavaScript in your browser to complete this form. Name * Age * Location* Phone Number * Email Address * Insurance Company Sun Life Financial Pru Life U.K. AXA Philippines AIA Philippines Manulife Insular Life BPI-AIA BDO Life Etiqa FWD Insurance Allianz PNB Life Phone Get a Quote

Disclosure: Your personal details will not be shared with any third-party companies. We’ll just need your contact details so our resident financial advisors can reach you to provide you with the details for any of the listed insurance company you’re interested in.