Updated on: Jul 21st, 2021
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6 min read
A business plan will act as a guide to the business in its direction and growth. It will also be able to help the business achieve its objectives in a structured and controlled manner.
Every business needs a business plan before it goes live. Without it, a business can end up directionless and without a definitive objective. A business plan is needed for two important reasons: – To attract investors into the business. – To give direction to the growth of the business.
There are two formats for making a business plan. You can choose to do it either ways as there is nothing like a wrong format for a business plan. As long as it suits your needs, you can choose either one. The two formats are:
A traditional business plan is the most common format used when making a business plan. This format uses a standard structure for a business plan and requires that the prospector put in a lot of work and time into preparing it. The traditional format goes into detail of every step and aspect of the business in the business plan. Such a business plan can be pages long and requires a lot of attention to detail. A traditional business plan is more advantageous when one is looking for investors for the business idea. Any investor would like a comprehensive plan of action that only the traditional business plan can provide. The following are the steps to creating a business plan using the traditional format:
A lean startup plan, on the other hand, is a shortened version of a traditional business plan. It follows a similar structure, but unlike the traditional format, it does not go too much into the details. It gives the gist of the important factors of the business in the business plan. Usually, a lean startup business plan can be completed in a couple of hours and fit into a single page. This format is usually used when one isn’t interested in inviting investors into the venture; this is because most investors will ask for a business plan that follows the traditional format as it holds more and detailed information. This helps them decide the pros and cons of investing. It saves time and effort but can still give you a clear idea of what needs to be done. The main idea behind doing a lean startup business plan is to save time and to have a personal road map for your business venture.
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A business plan is crucial for guiding business growth, attracting investors, and providing direction. It can be created in traditional or lean startup formats. Traditional plans are detailed, suitable for attracting investors, and cover aspects like company description, management, market analysis, products/services, funding, and financial projections. In contrast, lean startup plans offer a summarized version focusing on key business factors in a concise manner.