Creating a business plan is crucial for businesses of any size or stage.
If you plan to raise funds for your business through a traditional bank loan or SBA loan, none of them will want to move forward without seeing your business plan. Venture capital firms may or may not ask for one, but you’ll still need to do thorough planning to create a pitch that makes them want to invest.
And for owners of up-and-running businesses, updating the plan (or rewriting it) will help them respond to market shifts they wouldn’t be prepared for otherwise.
It also lets them compare their forecasts and budgets to actual financial results. This invaluable process surfaces where a business might be out-performing expectations and where weak performance may require a prompt strategy change.
The planning process is what uncovers those insights.
How long should your business plan be?
Thinking about a business plan strictly in terms of page length can risk overlooking more important factors, like the level of detail or clarity in the plan.
Not all of the plan consists of writing – there are also financial tables, graphs, and product illustrations to include.
But there are a few general rules to consider about a plan’s length:
Your business plan shouldn’t take more than 15 minutes to skim.
A good practice is to write your business plan to match the expectations of your audience.
If you’re walking into a bank looking for a loan, your plan should match the formal, professional style that a loan officer would expect. But if you’re writing it for stakeholders on your own team—shorter and less formal (even just a few pages) could be the better way to go.
The length of your plan may also depend on the stage your business is in.
For instance, a startup plan won’t have nearly as much financial information to include as a plan written for an established company will.
Organization and management structure: A listing of the departments and position breakdown of the business, as well as descriptions of the backgrounds and qualifications of the leadership team.
Key milestones: Laying out the key dates that a business is projected to reach certain milestones, such as revenue, break-even, or customer acquisition goals.
Financial plan: Balance sheets, cash flow forecast, and sales and expense forecasts with forward-looking financial projections, listing assumptions and potential risks that could affect the accuracy of the plan.
Appendix: All of the supporting information that doesn’t fit into specific sections of the business plan, such as data and charts.
If a business plan describes the tactics an entrepreneur will use to succeed in the market, then the business model represents how they will make money.
The difference may seem subtle, but it’s important.
Think of a business plan as the roadmap for how to exploit market opportunities and reach a state of sustainable growth. By contrast, the business model lays out how a business will operate and what it will look like once it has reached that growth phase.
If you’re stuck, start with a one-page business plan and check out our collection of over 550 business plan examples for inspiration. They’re broken out over dozens of industries—you can even copy and paste sections into your plan and rewrite them with information specific to your business.
See why 1.2 million entrepreneurs have written their business plans with LivePlan
Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning.
He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.