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What is a business assessment, and when do you need one.

We’ve already explained the 5 steps in TAB’s strategic business leadership process:

• Vision - Personal and business
• SWOT analysis - Strengths, weaknesses, opportunities, threats
• Plan - Personal and business
• Make it happen - Communication, review, accountability, planning team
• Turn the wheel - continuous review and revision as needed

And we’ve already discussed the importance of having a strategic plan for your business , the kind of plan that will make you remember the big picture: why you started your business in the first place.

But while having a vision for your business and having a strategic business plan to grow it are both keys to success, how do you get from A to B? How do you even know you need a strategic plan?

That’s when a business assessment comes in handy. Business assessments are a crucial aspect of understanding what your business plan should look like, what’s working the way it should, and what isn’t.

Think of your business as a car, and a business assessment as the blueprint for its design. While you might know your vehicle’s exact make, model, and mileage, you probably can’t remember all the details about its construction, such as the exact diameter of each of its hoses. The same goes for small businesses. If you install a hose that’s not the exact fit, the car will come screeching to a halt - and in this particular analogy, there are hundreds of hoses in varying sizes.

So much happens and so many decisions are made on a monthly basis -- without a business assessment it can be incredibly difficult for business owners to remember all of the details that can make huge differences in their operations and bottom line.

We recently interviewed hundreds of small business owners about what they wish they could do differently, if they could build their companies all over again. Out of all the aspects of running a business, the entrepreneurs wish they would’ve spent more time on strategic planning. Only 2% of respondents thought that a better product would have helped their business more than a better strategy.

Want additional insight? Read 4 Step Guide to Strategic Planning now to learn more

That’s why a business assessment is so important. If you have a vision for your business but don’t know where to start when it comes to figuring out a strategic plan for growth, it’s probably time for a business assessment. From there, you can build out your strategic plan and outline specific goals, as well as outline how you’re going to achieve them.

What does “SWOT” stand for?

Different firms offer different business assessments, each with their distinct advantages, but all business assessments are fundamentally lead to a balanced SWOT analysis of the organization.

A SWOT analysis looks at internal and external factors that are helpful or harmful to your business and the way it’s run. This type of assessment is particularly interested in identifying factors in the following 4 categories:

• The strongest parts of your business model and your best selling points. The core competencies of your team and your investments.

W eaknesses

• The weakest parts of your business model and weak spots in the sales funnel. What’s lacking in your team and missing from your investments.

O pportunities

• Potential leads, investors, events, and even new target markets.
• Potential competitors, reasons investors would cut funding, or negative market developments.

At a glance, it’s easy to see where most small business owners (and most business owners in general) like to spend their time - among the tropical shade and white sands of their company’s Strengths and Opportunities.

Rare is the business owner who takes the time to sit down and honestly assess weaknesses in his business model as well as potential threats (which can be difficult to see without another pair of eyes). This is why many small businesses fail -- entrepreneurs often have a vision, but no strategic plan for growth. And they have no strategic plan because they never conducted an honest business assessment.

They thought they were doing just fine when, in reality, weaknesses were eating away at their business model and threats were looming large in their market.

When’s the right time to get a business assessment?

That’s why we offer TAB Business Diagnostic. Our tool that we developed over years of research working with thousands of business owners that lets you comprehensively identify your competitive strengths but also key gaps in your business. Think of it as an MRI for your business that compares your business to others in the same industry. Not only does it identify the gaps but it also helps you prioritize, so you’ll know what challenges and opportunities you need to focus on first.

A business assessment does not take a lot of time but the results are invaluable. The output of the assessment is fed into the SWOT process. This helps identify the key areas of the strategic plan. Taking the first step in this process will put you on a path to running your business more strategically.

No matter of the economic conditions thrown at you and your business, there are steps to help safeguard your business so that you not only survive, but thrive. Download the whitepaper to learn more here

Read our 19 Reasons You Need a Business Owner Advisory Board

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How to Write a Business Plan, Step by Step

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1. Write an executive summary

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

A business plan is a document that outlines your business’s financial goals and explains how you’ll achieve them. A strong, detailed plan will provide a road map for the business’s next three to five years, and you can share it with potential investors, lenders or other important partners.

Here’s a step-by-step guide to writing your business plan.

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

This is the first page of your business plan. Think of it as your elevator pitch. It should include a mission statement, a brief description of the products or services offered, and a broad summary of your financial growth plans.

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

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

Next up is your company description, which should contain information like:

Your business’s registered name.

Address of your business location .

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

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

Lastly, it should cover the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

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

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

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

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

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

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

Your sales strategy.

Your distribution strategy.

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

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

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

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

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

You may also include metrics such as:

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

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

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

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

» NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

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

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

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

List any supporting information or additional materials that you couldn’t fit in elsewhere, such as resumes of key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts and personal and business credit history. If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

How Much Do You Need?

Here are some tips to help your business plan stand out:

Avoid over-optimism: If you’re applying for a business loan at a local bank, the loan officer likely knows your market pretty well. Providing unreasonable sales estimates can hurt your chances of loan approval.

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

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. You can search for a mentor or find a local SCORE chapter for more guidance.

The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

ZenBusiness: Start Your Dream Business

On a similar note...

Do This One Thing Before You Write Your Business Plan

Noah Parsons

6 min. read

Updated October 27, 2023

So, you’ve been asked to write a business plan. It’s likely that your mind is filled with images of long documents, bad memories of writing term papers, and worries about doing market research and creating financial forecasts.

Take a deep breath.

It doesn’t have to be that way. Today, I’m going to walk you through an easier way to get your business plan started, and show you how to develop a winning strategy.

Start with why you’re writing a business plan

But first, let’s talk about why you’re writing a business plan .

There are a lot of reasons why writing a business plan is important . Most businesses start the planning process because they are applying for a loan or seeking funding from investors . 

But, beyond needing to develop a plan that will impress the bank or your investors, you want to build a solid company. You want to develop a sound strategy that will help your business grow and be successful.

Unfortunately, while traditional business plans will help you develop strategy, they have several drawbacks.

Traditional business plans take too long to write, they’re rarely updated, and they are time-consuming to read.

Now, there may be a point in your business career that you will need to deliver a formal business plan to a bank, investors, or other business partners. But, until that point, I recommend that you start your planning with a simpler process— a one-page plan —that will help you develop your business strategy.

Building a one-page plan takes less than 20 minutes . You can even build several of them in an afternoon to try out different business ideas.

A Lean Plan forces you to distill your ideas for your business into the core of your strategy. As planning expert Tim Berry says, “a good strategy is about what you’re not doing.”

And, once you have nailed down your business strategy, you can expand on it with a longer business plan document that fleshes out the details of your plan.

What to include:

Your one-page plan is a very high-level overview of your business. Each section should only be a few bullet points, so you should be able to complete an initial draft of your plan in 20 minutes or less.

• 1. Your identity

What sets your business apart from others? What’s your focus? For example, a bike shop’s identity might be, “High-quality biking gear for families and regular people, not just for gearheads.” With this identity, this bike shop has focus. It describes who they are and what they are trying to do. Ideally, you should be able to describe your identity in one or two short sentences.

What’s your biggest business challenge right now?

• 2. The problem you are solving

How are you helping your customers? What problem will they go to you to solve? Don’t think that your business doesn’t solve a problem; for example, a new restaurant would fill a need for a particular type of cuisine or a certain atmosphere that is not currently available in a certain neighborhood.

• 3. Your solution to the problem

How does your business solve a customer’s problem? What is your product or service? Make sure your product or service is addressing your customer’s needs.

• 4. Your customer

Who is your ideal customer? A great exercise is to create a buyer persona, but you can just jot down some notes at this stage about who your customer is. Focus on a specific type of customer or certain groups. Focusing on “everyone” is not a sound business strategy.

• 5. The competition

Who is your competition , and what sets you apart? How are you better or different than other options available to your customers?

• 6. Sales channels

How will you reach your target customers ? Do you have a single storefront? Are you selling online? Do you rely on distributors to get your products onto store shelves?

• 7. Marketing activities

How will you let your customers know about your product or service? Do you need to go to trade shows? Will you buy online advertising?

• 8. Your team

Probably the single key to a successful business is a great group of people to turn an idea into reality. Do you have the right people? If you need additional key team members to help you build the business, identify them here.

• 9. Your business model

“ Business model ” sounds like a confusing term, but really it’s just a fancy way of talking about how you will make money. In the early stages of fleshing out your business idea, you can just write down a few bullet points about how you will make money and what your key expenses will be. 

As you refine your business idea, you will want to turn these initial notes into a sales forecast and an expense budget . But for your initial 20-minute plan, just write down a short list of the things you will charge for and the important expenses that you will have as you run the business.

• 10. Milestones

Ideas are nothing without execution—you need to turn your idea into a real business. Use the “ Milestones ” section of your one-page plan to list the critical things that need to be accomplished to start your business. Do you need to find a location? Maybe you need to get FDA approval for a new medical device. List the key milestones you need to accomplish here. Ideally, add approximate dates and list who will accomplish each task.

• 11. Partners and resources

If you need to work with other companies or business partners to get your idea off the ground, list those partners and resources here. Do you need a manufacturer or supplier for your products? Do you need a distributor to get your product on store shelves?

That’s it! A first pass at creating a one-page plan should only take 20 minutes or so. Set a timer and jump right in. Just getting everything down on paper is a great first step. The beauty of the one-page format is that you can come back and revise as you go.

• How to use your one-page plan

Now that you have the first draft of your Lean Plan, or maybe even several different mini-plans, you need to put it to use.

First, you’ll want to use your plan to identify the key assumptions about your business. Typically, those assumptions are around what famous entrepreneur and investor Marc Andreessen calls “product/market fit.” What that really means is that you’ve found a group of potential customers who have the problem you say they have, and who are willing to spend money on your solution.

Your Lean Plan includes assumptions about who your customer is, what problem they have, and what kind of solution they want.

As a next step, you’ll want to go out and talk to potential customers and verify that they do indeed have the problem you’ve assumed they have and that they’re willing to spend money on your solution.

As you gather feedback from potential customers, you’ll refine your plan . This is where you’ll be glad that you started with a one-page plan instead of a detailed business plan. It’s easy to update and revise as you go. You can quickly update it with new information as needed.

Now, if you don’t need to present a plan to outsiders, this may be all the business plan that you need. But, if you do need to create that formal business plan document, you can use your one-page plan as the key outline for that document. The business plan may also document more details about your marketing plan, product plan, or hiring plans, but ultimately, your business plan will just expand on and provide additional detail for each section of your one-page plan.

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

Noah is currently the COO at Palo Alto Software, makers of the online business plan app LivePlan.

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How to use an assessment report to create an effective business plan

• Written April 14, 2022
• by Dave Lavinsky

An assessment report is a document that both summarizes and provides a deeper analysis of a particular topic or issue. To effectively  create a business plan , an organization needs to have an informed understanding of the market. The findings from the assessment report help provide this understanding by offering data about the current market as well as potential future developments that will impact it.

Below you will learn more about assessment reports and how to use them to create effective business plans.

What to include in an assessment report

In your assessment report, you will convey facts about your industry, including information about both the current situation as well as likely future developments. This data can then be used to gain a better understanding of where your organization stands with regards to competition and customers. In addition, this information can help your organization better understand what challenges and opportunities lay ahead.

An  assessment report  must answer specific questions to get the most accurate picture of your organization and industry. The following are key questions to answer in your assessment report:

• What industry is your organization targeting?
• What are key new developments in this industry? What opportunities and threats does it present for organizations like yours?
• Who are the main competitors in the industry? How big are they, what strategies do they use to compete, who are their customers, etc.? 
• What factors may make a particular segment of the market more attractive to your organization? 
• What are the major strengths and weaknesses of your organization in the industry? What challenges does it need to overcome, and what opportunities should it take advantage of?
• What strategies can be used to take advantage of new opportunities or defend against threats presented by the industry? 
• How refined are your organization’s operations? This should include an assessment of your sales, capacity, production costs, distribution channels, etc. as compared with your competition. 
• What are the details of the supply chain within the industry? This should include an assessment of suppliers’ strengths and weaknesses, opportunities for collaboration or consolidation among suppliers/customers/distributors, etc. 
• What are the main factors that drive demand in the industry? 
• What are the demographic and psychographic profiles of customers? What are the customer trends if any? 
• Are there any changes in government policies and regulations that may impact the industry? This can include policy settings related to taxes, trade restrictions, tariffs, etc. It can also include reviews of any new environmental laws that may impact organizations in this industry.

The results of the assessment report should then be used to create a solid business plan based on realistic expectations. This is discussed below.

Using your assessment report to create your business plan

Below is an outline of each key section of your business plan and what it must include. As you’ll see, many of the questions you must answer in your plan will already have been answered in your assessment report . As such, complete your assessment report first, and then writing your plan will be relatively quick and easy.

1. Executive summary

The executive summary is an overview of the entire business plan and is usually one or two pages in length. It introduces and summarizes the key points made throughout the rest of your business plan.

2. Company overview

In your company analysis, you will detail the type of business you are operating. The company analysis section of your business plan also needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business? 
• What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new store openings, etc. 
• Your legal structure. Are you incorporated as an S-Corp? An LLC ? A sole proprietorship? Explain your legal structure here.

The following sections pull much more information from your assessment report.

3. Industry analysis

The Industry Analysis section defines how big your market is and key market trends. It’s used to ensure the market is large enough to support your company’s growth and to ensure you have the best strategy to capture market share.

The following questions should be answered in the industry analysis section of your business plan:

• How big is the industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?

Each of these questions should have already been answered in your assessment report, although you might need to re-organize the information to better fit within your plan.

4. Customer analysis

In this section of your plan, you’ll describe who your typical customer is, what they want, and why they will choose your company over the competition. You will also detail how many potential customers exist and any trends affecting them.

Use census data , interviews, surveys, etc. to back up any claims you make in this section. The good news is that you will have already conducted this research when developing your assessment report.

5. Competitive analysis

Your competitive analysis identifies the competitors your business faces. 

For each competitor, you should provide an overview of their business and document their strengths and weaknesses. Answer questions such as:

• What types of customers do they serve?
• What products do they offer?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

Next, document how you will achieve competitive advantage. For example:

• Will you provide different or better products or services?
• Will you provide superior customer service?
• Will you offer better pricing?

Once again, you should have answered all of these questions in your assessment report and can then copy that information into your business plan.

6. Marketing plan

While the core marketing plan components will not have been developed when creating your assessment report, in doing the assessment report, you will have strategized your marketing and growth plan so you won’t be starting from scratch.

Be sure to includes the following in your marketing plan section:

• Product or Service: describe the products and services your company offers.
• Price: Document the prices you offer and how they compare to competitor pricing.
• Promotions: Detail how you will attract new customers using methods such as: ○  Pay per click advertising ○  Television advertising ○  Flyers ○  Public Relations ○  Etc.

7. Operations plan

Your operations plan includes two key sections. It starts by describing the daily processes you perform to run your business such as serving customers, procuring inventory, etc.

Next, you will document your long-term goals along with the dates you hope to achieve them. These are the milestones you strategized when creating your assessment report.

8. Management team  

The Management Team section of your business plan describes the key members of your management team, their experience and education and what makes them qualified to grow your company.

When conducting the SWOT (strengths, weaknesses, opportunities and threats) analysis during your assessment report, you will answer many questions about the worthiness of your current team that you can document in your plan. You will also identify management team gaps that you must fill; these gaps should be included in your business plan too.

9. Financial plan

Your financial plan includes projections for future revenues, gross profit , operating expenses, and earnings for the next 5 years.

Your projections must be tied to the research conducted in your assessment report. For example, your company can’t grow to a size that exceeds the industry size you determined. Likewise, by conducting research while doing the assessment report, you will have identified reasonable assumptions like growth rates, employee salaries, etc., that will help you put together well-reasoned and defendable financial forecasts.

In addition, if applicable, your financial plan will document if your company needs funding to achieve its growth plan and detail the key uses of such funds.

As you can see, your assessment report and business plan go hand in hand. Your assessment report forces you to conduct market research and determine the optimal strategies to grow your business. Your business plan expands upon that research and strategy to more clearly define your growth roadmap. Also, if you need funding to grow, it bolsters your need for funding and gives investors and lenders confidence that they will get a solid return on their investment.

Create your own assessment for free!

About the author:, dave lavinsky, recommended reading, best 9 scoreapp alternatives for lead capturing.

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• 11.4 The Business Plan
• Introduction
• 1.1 Entrepreneurship Today
• 1.2 Entrepreneurial Vision and Goals
• 1.3 The Entrepreneurial Mindset
• Review Questions
• Discussion Questions
• Case Questions
• Suggested Resources
• 2.1 Overview of the Entrepreneurial Journey
• 2.2 The Process of Becoming an Entrepreneur
• 2.3 Entrepreneurial Pathways
• 2.4 Frameworks to Inform Your Entrepreneurial Path
• 3.1 Ethical and Legal Issues in Entrepreneurship
• 3.2 Corporate Social Responsibility and Social Entrepreneurship
• 3.3 Developing a Workplace Culture of Ethical Excellence and Accountability
• 4.1 Tools for Creativity and Innovation
• 4.2 Creativity, Innovation, and Invention: How They Differ
• 4.3 Developing Ideas, Innovations, and Inventions
• 5.1 Entrepreneurial Opportunity
• 5.2 Researching Potential Business Opportunities
• 5.3 Competitive Analysis
• 6.1 Problem Solving to Find Entrepreneurial Solutions
• 6.2 Creative Problem-Solving Process
• 6.3 Design Thinking
• 6.4 Lean Processes
• 7.1 Clarifying Your Vision, Mission, and Goals
• 7.2 Sharing Your Entrepreneurial Story
• 7.3 Developing Pitches for Various Audiences and Goals
• 7.4 Protecting Your Idea and Polishing the Pitch through Feedback
• 7.5 Reality Check: Contests and Competitions
• 8.1 Entrepreneurial Marketing and the Marketing Mix
• 8.2 Market Research, Market Opportunity Recognition, and Target Market
• 8.3 Marketing Techniques and Tools for Entrepreneurs
• 8.4 Entrepreneurial Branding
• 8.5 Marketing Strategy and the Marketing Plan
• 8.6 Sales and Customer Service
• 9.1 Overview of Entrepreneurial Finance and Accounting Strategies
• 9.2 Special Funding Strategies
• 9.3 Accounting Basics for Entrepreneurs
• 9.4 Developing Startup Financial Statements and Projections
• 10.1 Launching the Imperfect Business: Lean Startup
• 10.2 Why Early Failure Can Lead to Success Later
• 10.3 The Challenging Truth about Business Ownership
• 10.4 Managing, Following, and Adjusting the Initial Plan
• 10.5 Growth: Signs, Pains, and Cautions
• 11.1 Avoiding the “Field of Dreams” Approach
• 11.2 Designing the Business Model
• 11.3 Conducting a Feasibility Analysis
• 12.1 Building and Connecting to Networks
• 12.2 Building the Entrepreneurial Dream Team
• 12.3 Designing a Startup Operational Plan
• 13.1 Business Structures: Overview of Legal and Tax Considerations
• 13.2 Corporations
• 13.3 Partnerships and Joint Ventures
• 13.4 Limited Liability Companies
• 13.5 Sole Proprietorships
• 13.6 Additional Considerations: Capital Acquisition, Business Domicile, and Technology
• 13.7 Mitigating and Managing Risks
• 14.1 Types of Resources
• 14.2 Using the PEST Framework to Assess Resource Needs
• 14.3 Managing Resources over the Venture Life Cycle
• 15.1 Launching Your Venture
• 15.2 Making Difficult Business Decisions in Response to Challenges
• 15.3 Seeking Help or Support
• 15.4 Now What? Serving as a Mentor, Consultant, or Champion
• 15.5 Reflections: Documenting the Journey
• A | Suggested Resources

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/

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

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Business Development > Starting a Business > Business Development Process

Updated September, 2021 File C5-02

Idea assessment and business development process.

An important aspect of successful business development is to follow a process of how you will assess a business idea or concept (project), decide whether to move forward with the project and build a business if it is decided to move forward. The five steps below help outline a simple process you can follow. The steps are not a rigid structure to follow. Rather they identify issues you need to address and when to address them.

If you do not follow a process, you will find yourself going in circles and revisiting the same issues over and over without making progress. In addition to wasting time, the frustration may cause you to make poor decisions that can haunt you later. 

Following the steps outlined here does not guarantee business success. However, it can greatly increase your chances of success.

Step 1 – Initial Idea Exploration, Identification and Assessment

The origination of a new business idea can come from a variety of sources. It may come from the board room of an existing business or a group of producers sitting around the kitchen table. Regardless of the setting, you may want to use the following approach to formulate the business concept. Anytime during Steps 1 and 2 you may decide that your idea is not viable, in which case you may want to abandon the idea.

• Form a project committee - Creating a good project committee involves bringing together individuals who have the business development skills needed to investigate the idea/concept and carry through with business formation if the concept is viable. 
• Formulate general business idea(s) or concept(s) - Define your business idea or concept and describe why it has merit. Your idea may involve filling an unmet need in the marketplace with a new product, providing an existing product in a new form, producing a product better or cheaper than competitors, or other ways in which value can be added. Remember, an idea is only viable if people are willing to pay you for what it provides. For example, a premium product is only viable if someone is willing to pay more for it.
• Identify alternative business models or scenarios for the idea(s) - A business model describes how the business will function in producing the product or service and providing it to the customer. A business scenario is a logical assemblage of the essential business elements starting with raw materials procurement and ending with the sale of the final product, and all the stages in between.
• Investigate idea/concept and alternative business scenarios - Conduct an initial informal investigation of the validity of your idea.  Investigate the scenarios or models. Early in the process this may be nothing more than a series of telephone calls to knowledgeable individuals. Does your idea make sense? Identify business scenarios/models for further study and eliminate those that are not viable.
• Formal investigation - You may want to conduct a formal assessment such as a pre-feasibility study or a marketing study of the idea and various scenarios or models. This may involve using consultants to investigate various aspects of the project. It may involve eliminating additional scenarios/models or identifying new ones.
• Through the process of elimination you will reduce the number of scenarios/models under consideration for further study.
• Refine and flesh-out the remaining scenarios/models.

Step 2 - Idea/Concept and Scenario/Model Deliberation and Assessment

• Further refine the business scenarios/models - If you have conducted any of the formal assessments described above, you have information that can be used to further refine your business scenario/models. So by now you should have refined your idea to one or a small number of specific and detailed business scenario/models that you want to assess. This is critical before you move to the next step.
• Conduct feasibility study - A feasibility study will provide a comprehensive and detailed assessment of the market, operational, technical, managerial and financial aspects of your business project. These factors will feed into the economic assessment of your project (is it profitable?). If you have already conducted a pre-feasibility study, marketing study or other study; these materials can be used in the feasibility study. Feasibility studies are usually prepared by consultants, so you will need to investigate consultants who are familiar with your type of business and experienced in preparing feasibility studies.
• Analyze the feasibility study - When you receive the feasibility report, the first step is not to begin deliberations on whether to proceed with the project. Rather, you need to determine the completeness and accuracy of the study. Does it address the issues you want addressed? Was there a thorough investigation of the critical issues? Challenge the assumptions and conclusions of the study. Only after you have accepted the study as being complete and comprehensive can you move to Step 3. See Information File C5-64, When to Do and How to Use a Feasibility Study for more information.
• Further refine the idea and scenario/model - However, before you proceed you may see the need for further study of various aspects of the business project. It is not uncommon for the feasibility study to uncover new issues that need to be investigated. This may create the need for additional negotiations with your consultants to expand on the original scope of the feasibility study. 

Step 3 - Go/No-Go Decision

This is the most critical step in the entire business development process. In a sense, it is the point of no return. Once you start down the path of creating a business, it is difficult to turn back. If you have unresolved doubts or reservations about the project, you should not proceed. That is why it is important to have an open, honest and thorough discussion when making this decision. 

You may find that there is division in your committee. Some members may want to move forward while others may want to end it. This is not uncommon. Each needs to take an honest look at the other side’s arguments. If the issues cannot be resolved, each side needs to go its own way with no bad feelings. At this point, the remaining members need to determine if they want to proceed with business creation.

Commitment to the project is another important factor to consider before you proceed. Most beginners to business development greatly underestimate the time and effort required to start a business. A financial commitment by project members at this time (everyone throws some money in the pot) is an important sign of commitment to creating the business.

This step involves making one of the three possible decisions listed below:

• Decide that the project is viable and move forward with it.
• Decide to do more study and or analyze additional alternatives.
• Decide that the project is not viable and abandon it.

Step 4 – Business Plan Preparation and Implementation

If you decide to proceed with creating a business, you will need to prepare a business plan. A business plan is an outline or blueprint of how you will create your business. If you conducted a feasibility study, it will provide some of the information needed for your business plan. Also, business planning often involves the use of consultants. However, don’t turn the process completely over to a consultant, you need to stay integrally involved in the planning process. Remember, it is your business. 

Although planning can involve considerable time and effort, it is the easiest part. Implementing the plan is much more difficult. Many prospective businesses experience problems or failure due to the improper implementation of their business plan. This step requires commitment and dedication. Unforeseen problems will emerge. Your persistence is critical.

Implementing your business plan will include, but is not limited to:

• Creating a legal structure
• Securing market access
• Raising equity and securing financing
• Hiring management and staff
• Constructing facility

Step 5 – Business Operations

Now that you have successfully started your value-added business, your work has just begun. Producer groups often forget that once the business is created, it takes constant attention for it to remain healthy and viable. 

Operating a business is very different than starting a business. It requires a different set of skills. So the people who create the business may not be the best people to manage the business.

These are the five steps you will want to follow for taking an idea and making a viable business from it. These steps will not guarantee success. However, they will increase your odds of success. Also, you will make more efficient use of your time.

Don Hofstrand, retired extension value added agriculture specialist, [email protected]

Don Hofstrand

Retired extension value added agriculture specialist view more from this author.

Business Plan Introduction Example – Introduction of a Business Plan

Your business plan introduction provides a general overview, the “bird’s eye view,” of your plan. It is written at a high level without going into details. (That’s what the rest of the plan should do.) The introduction of a business plan sets the tone right after your executive summary. Here’s how to make your words count.

Table of Contents

Introduction of a Business Plan

Your business plan introduction is different than your executive summary. The introduction should contain a two or three page management overview of the business. It covers the description of the business, the goals and why the business is a good venture to start.

The other parts of a business plan , like the management team outline, the financial plan, the marketing plan, etc., are all going to provide the reader with an intense look at the business: the “ground floor view” of how the business will succeed.

Video: Secrets for Crafting a Compelling Business Plan Intro

Discover the blueprint to crafting an impactful business plan introduction. The video podcast below shows you the proven strategies for crafting intros that grab attention, outline your vision, and guide your journey. It is an essential guide to creating a powerful opening section for your business plan.

The introduction in a business plan should take all the parts of the business plan and summarize them quickly.  Do this section of your business plan first, and last!

See free sample business plans on MoreBusiness.com’s Business Plan Template section.

Do it first to capture a general overview. This way, you know what you will write about in greater detail as you complete all of the other parts of the business plan.

Then, when you finish writing your business plan, do it last to make sure that you have covered all the critical points you need to convey.

Business Plan Introduction Template

Use the following questions as a template to write your business plan introduction. With this section of the plan you are trying answer a few things:

• Why this business?
• Who’s going to buy?
• How will they buy? What’s the buying and selling process look like?
• How will my business be different than the competitor’s?
• What’s my path to profitability?
• When will I become profitable?
• How much will I make and by when?

Again, you will answer these items in detail later in the full plan. The introduction of a business plan gives a general overview and excite the reader to keep them interested.

Business Plan Introduction Example

Your business plan introduction should briefly talk about what you want to accomplish in the business and how you see it working.

For example, coffee shop business plan might talk about how the market has made specialty coffee shops very popular right now. Provide data on how the location you’ve selected is perfect for a new shop.

You don’t have to give details here (that’s taken care of in the individual analysis sections that will come later). Rather, you simply provide an overview that is meant to get the reader excited.

Download a free sample marketing plan to use as a template to create your own strategy.

So a coffee business can talk about the high profit margin of coffee and how the shop will be run by a coffee expert and an expert marketer and will serve the people in the area.

A professional services or technology business plan introduction should address the unique approach you will take to secure customers because you may have a lot of competition. Perhaps you will specialize in a specific target market or demographic. Talk about your niche marketing strategy in the introduction to keep readers tuned in.

In a clothing line business plan , for example, your business plan introduction should discuss what makes your brand unique and how you will generate buzz.

Address the Big Question: Profitability

Readers of your business plan – whether you are looking for investors or money from a bank – will be able to tell very quickly whether you have done your homework and actually researched the business or whether this is just a whim.

Your investors, or even you alone if you don’t have any investors, want to make sure your business doesn’t fail . You don’t have to give all the facts in the introduction of a business plan, but you should be clear and correct in your overview.

Remember, this is the second thing your potential investor will read (the first being the business plan executive summary). They may not be as convinced about the business opportunity as you are. Ultimately, the introduction of a business plan should answer the bottom line question that the reader is asking: will this business be profitable and make money from my investment?

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How to Evaluate a Business Plan

by Evangeline Marzec

Published on 16 Oct 2019

Whether you're an investor, an entrepreneur or a business skills teacher, you'll be exposed to a wide variety of business plans and should have a solid, somewhat standard approach to conducting a business plan assessment. Analyze each section individually, and then look at the plan as a whole to determine the viability of the business and the likelihood of its success in the manner proposed. Also consider the writing skills and attention to detail that went into formulating the plan.

Read and Understand the Executive Summary

The first step in a business plan assessment is reading the business' executive summary. This should be a concise "elevator pitch", not a summary of the business plan. In one or two pages, it should convey the market opportunity and the uniquely compelling features of the business that will help it meet that opportunity. The executive summary should excite you and make you want to turn to the next page. If it doesn't, the entrepreneur might lack marketing or writing skills, or it may indicate that the idea itself is not going to fly.

Analyze Opportunity in the Market

Evaluate the market opportunity. Ideally, the market should be growing at least 10% per year and have a substantial potential relative to the size of the business and investment. For example, a small company seeking an investment of $50,000 should see a potential market of $5 million.

The larger the potential market and the faster it is growing, the greater the opportunity in the market. Look to the exhibits and appendices to ensure that the business actually has done the necessary market research and can back up any claims.

Evaluate the Company's Business Strategy

Examine the company strategy for capturing its market. The plan must clearly describe the problem the company is solving or need it is meeting for customers, and then propose a solution. This is the crux of a business plan assessment.

Closely examine the alignment between problem and solution. Will the company actually address that need? This evaluation must take into account the product or service being offered, the operational capacity and efficiency with which the business actually can produce its product, and the quality of the proposed marketing efforts.

Examine the Business Environment

The business plan should describe the competitive landscape in which the company operates, preferably by referencing Porter's 5 Forces or another well-established tool. Look for detailed breakdowns and analyses of each of it competitors, and of how the company is different and better than the competition in a particular niche. This section should include the regulatory environment and mention any costs or necessary delays associated with regulations.

Porter's 5 Forces is an evaluation model that looks closely at the five competitive forces at play in the business landscape. These forces are present in every industry and by evaluating how they manifest in an individual industry, one can gauge that industry's strengths and weaknesses. Porter's 5 Forces are:

• Competition in the industry
• Potential of new entrants in the industry
• Power of suppliers
• Power of customers
• Threat of substitutes

Evaluate the Leadership Team

Look for experience, integrity and passion in the executive team. Read bios and brief highlights of each executive's strengths and expertise should accompany standard business information such as headquarters and corporate structure. The company should have experienced advisers, either formally or informally.

It is paramount that the principals involved in the business convey their passion and drive toward success with this project. If the founders haven't invested their own capital into the business, or plan on keeping their “day jobs” while running the business, they might lack faith in the project.

Crunch the Numbers and Understand the Finances

Ensure that the financial projections are both promising and realistic. Most entrepreneurs vastly overstate their company's potential, starting with the market size and market share. Financial figures should be based on historical data if available, or very conservative projections if the company is not yet profitable. Entrepreneurs that project capturing 20% market share in the first two years probably have unrealistic expectations.

Investigate the returns provided by the investment. Good business plans include exit strategies for pulling the initial investment back out of the company, and have a realistic valuation of their shares.

View the Business Plan as a Living Document

Evaluate the business plan as a whole document, and as a reflection of a real-world company. Determine whether the market need is adequate, the company's offerings are compelling, the management team experienced and committed, and the financial statements realistic. Does this company as a whole have a chance of success?

Strategic Management & Strategic Planning Process

Strategic management process is a method by which managers conceive of and implement a strategy that can lead to a sustainable competitive advantage. [1 ]

Strategic planning process is a systematic or emerged way of performing strategic planning in the organization through initial assessment, thorough analysis, strategy formulation, its implementation and evaluation.

What is strategic planning process?

The process of strategic management lists what steps the managers should take to create a complete strategy and how to implement that strategy successfully in the company. It might comprise from 7 to nearly 30 steps [4] and tends to be more formal in well-established organizations.

The ways that strategies are created and realized differ. Thus, there are many different models of the process. The models vary between companies depending upon:

• Organization’s culture.
• Leadership style.
• The experience the firm has in creating successful strategies.

All the examples of the process in this article represent top-down approach and belong to the ‘design school’.

Components of strategic planning process

There are many components of the process which are spread throughout strategic planning stages. Most often, the strategic planning process has 4 common phases: strategic analysis, strategy formulation, implementation and monitoring (David [5] , Johnson, Scholes & Whittington [6] , Rothaermel [1] , Thompson and Martin [2] ). For clearer understanding, this article represents 5 stages of strategic planning process:

Initial Assessment

Situation analysis.

• Strategy Formulation
• Strategy Implementation

Strategy Monitoring

Components: Vision statement & Mission statement Tools used: Creating a Vision and Mission statements.

The starting point of the process is initial assessment of the firm. At this phase managers must clearly identify the company’s vision and mission statements.

Business’ vision answers the question: What does an organization want to become? Without visualizing the company’s future, managers wouldn’t know where they want to go and what they have to achieve. Vision is the ultimate goal for the firm and the direction for its employees.

In addition, mission describes company’s business. It informs organization’s stakeholders about the products, customers, markets, values, concern for public image and employees of the organization (David, p. 93) [5] . Thorough mission statement acts as guidance for managers in making appropriate (Rothaermel, p. 34) [1] daily decisions.

Components: Internal environment analysis, External environment analysis and Competitor analysis Tools used: PEST , SWOT , Core Competencies, Critical Success Factors, Unique Selling Proposition, Porter’s 5 Forces , Competitor Profile Matrix , External Factor Evaluation Matrix , Internal Factor Evaluation Matrix, Benchmarking , Financial Ratios, Scenarios Forecasting, Market Segmentation, Value Chain Analysis , VRIO Framework

When the company identifies its vision and mission it must assess its current situation in the market. This includes evaluating an organization’s external and internal environments and analyzing its competitors.

During an external environment analysis managers look into the key external forces: macro & micro environments and competition. PEST or PESTEL frameworks represent all the macro environment factors that influence the organization in the global environment. Micro environment affects the company in its industry. It is analyzed using Porter’s 5 Forces Framework.

Competition is another uncontrollable external force that influences the company. A good example of this was when Apple released its IPod and shook the mp3 players industry, including its leading performer Sony. Firms assess their competitors using competitors profile matrix and benchmarking to evaluate their strengths, weaknesses and level of performance.

Internal analysis includes the assessment of the company’s resources, core competencies and activities. An organization holds both tangible resources: capital, land, equipment, and intangible resources: culture, brand equity, knowledge, patents, copyrights and trademarks (Rothaermel, p. 90) [1] . A firm’s core competencies may be superior skills in customer relationship or efficient supply chain management. When analyzing the company’s activities managers look into the value chain and the whole production process.

As a result, situation analysis identifies strengths, weaknesses, opportunities and threats for the organization and reveals a clear picture of company’s situation in the market.

Components: Objectives, Business level, Corporate level and Global Strategy Selection Tools used: Scenario Planning, SPACE Matrix, Boston Consulting Group Matrix , GE-McKinsey Matrix, Porter’s Generic Strategies, Bowman’s Strategy Clock, Porter’s Diamond, Game Theory, QSP Matrix.

Successful situation analysis is followed by creation of long-term objectives. Long-term objectives indicate goals that could improve the company’s competitive position in the long run. They act as directions for specific strategy selection. In an organization, strategies are chosen at 3 different levels:

• Business level strategy. This type of strategy is used when strategic business units (SBU), divisions or small and medium enterprises select strategies for only one product that is sold in only one market. The example of business level strategy is well illustrated by Royal Enfield firms. They sell their Bullet motorcycle (one product) in United Kingdom and India (different markets) but focus on different market segments and sell at very different prices (different strategies). Firms may select between Porter’s 3 generic strategies: cost leadership, differentiation and focus strategies. Alternatively strategies from Bowman’s strategy clock may be chosen (Johnson, Scholes, & Whittington, p. 224 [6] ).
• Corporate level strategy. At this level, executives at top parent companies choose which products to sell, which market to enter and whether to acquire a competitor or merge with it. They select between integration, intensive, diversification and defensive strategies.
• Global/International strategy. The main questions to answer: Which new markets to develop and how to enter them? How far to diversify? (Thompson and Martin, p. 557 [2] , Johnson, Scholes, & Whittington, p. 294 [6] )

Managers may choose between many strategic alternatives. That depends on a company’s objectives, results of situation analysis and the level for which the strategy is selected.

Components: Annual Objectives, Policies, Resource Allocation, Change Management, Organizational chart, Linking Performance and Reward Tools used: Policies, Motivation, Resistance management, Leadership, Stakeholder Impact Analysis, Changing organizational structure, Performance management

Even the best strategic plans must be implemented and only well executed strategies create competitive advantage for a company.

At this stage managerial skills are more important than using analysis. Communication in strategy implementation is essential as new strategies must get support all over organization for effective implementation. The example of the strategy implementation that is used here is taken from David’s book, chapter 7 on implementation [5] . It consists of the following 6 steps:

• Setting annual objectives;
• Revising policies to meet the objectives;
• Allocating resources to strategically important areas;
• Changing organizational structure to meet new strategy;
• Managing resistance to change;
• Introducing new reward system for performance results if needed.

The first point in strategy implementation is setting annual objectives for the company’s functional areas. These smaller objectives are specifically designed to achieve financial, marketing, operations, human resources and other functional goals. To meet these goals managers revise existing policies and introduce new ones which act as the directions for successful objectives implementation.

The other very important part of strategy implementation is changing an organizational chart. For example, a product diversification strategy may require new SBU to be incorporated into the existing organizational chart. Or market development strategy may require an additional division to be added to the company. Every new strategy changes the organizational structure and requires reallocation of resources. It also redistributes responsibilities and powers between managers. Managers may be moved from one functional area to another or asked to manage a new team. This creates resistance to change, which has to be managed in an appropriate way or it could ruin excellent strategy implementation.

Components: Internal and External Factors Review, Measuring Company’s Performance Tools used: Strategy Evaluation Framework, Balanced Scorecard, Benchmarking

Implementation must be monitored to be successful. Due to constantly changing external and internal conditions managers must continuously review both environments as new strengths, weaknesses, opportunities and threats may arise. If new circumstances affect the company, managers must take corrective actions as soon as possible.

Usually, tactics rather than strategies are changed to meet the new conditions, unless firms are faced with such severe external changes as the 2007 credit crunch.

Measuring performance is another important activity in strategy monitoring. Performance has to be measurable and comparable. Managers have to compare their actual results with estimated results and see if they are successful in achieving their objectives. If objectives are not met managers should:

• Change the reward system.
• Introduce new or revise existing policies.

The key element in strategy monitoring is to get the relevant and timely information on changing environment and the company’s performance and if necessary take corrective actions.

Different models of the process

There is no universal model of the strategic management process. The one, which was described in this article, is just one more version of so many models that are established by other authors. In this section we will illustrate and comment on 3 more well-known frameworks presented by recognized scholars in the strategic management field. More about these models can be found in the authors’ books.

Source: David (p. 46)

• Strategy Evaluation
• Develop vision and mission
• External environment analysis
• Internal environment analysis
• Establish long-term objectives
• Generate, evaluate and choose strategies
• Implement strategies
• Measure and evaluate performance
• Indicates all the major steps that have to be met during the process.
• Illustrates that the process is a continuous activity.
• Arrows show the two way process. This means that companies may sometimes go a step or two back in the process rather than having to complete the process and start it all over from the beginning. For example , if in the implementation stage the company finds out that the strategy it chose is not viable, it can simply go back to the strategy selection point instead of continuing to the monitoring stage and starting the process from the beginning.
• Represents only strategy formulation stage and does separate situation analysis from strategy selection stages.
• Confuses strategy evaluation with strategy monitoring stage.

Source: Rothaermel (p. 20)

• Formulation
• Implementation
• Initial analysis
• External and internal analysis
• Business or corporate strategy formulation
• Shows that the process is a continuous activity.
• Separates initial analysis (in this articles it’s called initial assessment) from internal/external analysis.
• Emphasizes the main focus of strategic management: “Gain and sustain competitive advantage”.
• Does not include strategy monitoring stage.
• Arrows indicate only one way process. For example , after the strategy formulation the process continues to the implementation stage while this is not always the truth. Companies may go back and reassess their environments if some conditions had changed.

Source: Thompson and Martin (p.36)

• Where are we?
• Where are we going?
• How are we getting there?
• How are we doing?
• Situation appraisal: review of corporate objectives
• Situation assessment
• Clarification of objectives
• Corporate and competitive strategies
• Strategic decisions
• Monitor progress
• The model is supplemented by 4 fundamental strategic management questions.
• Arrows indicate only one way process.

Limitations

It is rare that the company will be able to follow the process from the first to the last step. Producing a quality strategic plan requires time , during which many external and even internal conditions may change. This results in the flawed strategic plan which has to be revised, hence requiring even more time to finish.

On the other hand, when implementing the strategic plan, the actual results do not meet the requirements of the strategic plan so the plan has to be altered or better methods for the implementation have to be discovered. This means that some parts of strategic management process have to be done simultaneously, which makes the whole process more complex .

• Rothaermel, F. T. (2012). Strategic Management: Concepts and Cases. McGraw-Hill/Irwin, p. 20, 32-45, 90
• Thompson, J. and Martin, F. (2010). Strategic Management: Awareness & Change. 6th ed. Cengage Learning EMEA, p. 34, 557, 790
• Clark, D. N. (1997). Strategic management tool usage: a comparative study. Strategic Change Vol. 6, pp. 417-427
• David, F.R. (2009). Strategic Management: Concepts and Cases. 12th ed. FT Prentice Hall, p. 36-37, 45-47, 93
• Johnson, G, Scholes, K. Whittington, R. (2008). Exploring Corporate Strategy. 8th ed. FT Prentice Hall, p. 11-13, 224, 294
• Virtual Strategist (2012). Overview of the Strategic Planning Process (VIDEO). Available at: https://www.youtube.com/watch?v=sU3FLxnDv_A
• Strategic Management & Strategic Planning

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What does initial assessment mean?

Definitions for initial assessment ini·tial as·sess·ment, this dictionary definitions page includes all the possible meanings, example usage and translations of the word initial assessment ., did you actually mean intelligent or indulgent , dictionary of military and associated terms rate this definition: 2.2 / 5 votes.

• initial assessment

An assessment that provides a basic determination of the viability of the infiltration and exfiltration portion of a proposed special operations forces mission. Also called IA.

How to pronounce initial assessment?

Alex US English David US English Mark US English Daniel British Libby British Mia British Karen Australian Hayley Australian Natasha Australian Veena Indian Priya Indian Neerja Indian Zira US English Oliver British Wendy British Fred US English Tessa South African

How to say initial assessment in sign language?

Chaldean Numerology

The numerical value of initial assessment in Chaldean Numerology is: 7

Pythagorean Numerology

The numerical value of initial assessment in Pythagorean Numerology is: 1

Examples of initial assessment in a Sentence

Donald Trump :

As House Intelligence Chairman Devin Nunes said just the other day, if we got all the information we're looking for, we could wrap this up faster. But I have seen no evidence to the contrary of, of the initial assessment that Chairman Gowdy has made, but I want to make sure that we run every lead down and make sure we get final answers to these questions.

Paul Ryan :

I think Chairman Gowdy's initial assessment 's accurate, I think, but we have some more digging to do. We're waiting for some more document requests, it would have been helpful if we got this information earlier.

Liviu Movileanu :

Blood tests have been traditionally involved in the initial assessment for the presence of various cancers. One ubiquitous example is the PSA test for the detection of prostate cancer.

Alessandro Valentini :

Although the details on the deal are pretty light so far, this is a sensible move for Aviva, it is consistent with management's focus on cash flow generation, the initial assessment suggests the valuation for the deal is fair.

As Chairman Nunes said just the other day, if we got all the information we're looking for, we could wrap this up faster. But I have seen no evidence to the contrary of, of the initial assessment that Chairman Gowdy has made, but I want to make sure that we run every lead down and make sure we get final answers to these questions.

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