This debate has become a hot topic in the business world. Traditionally, writing formal business plans was standard for start-ups and existing businesses alike, defining goals, strategies and expected outcomes over time, as well as substantiating the business model and potential for investors. However, as the economy has recently moved toward a constantly changing entrepreneurial model, many claim the traditional business plan has become outmoded.
While it is true that a formal, static business plan can lack the flexibility necessary for modern business, the basic tenets still apply. Entrepreneurs need to constantly evaluate their businesses by setting and revising goals, objectives, marketing strategies and other aspects of business administration. This is precisely how a business plan in action should look.
In Louisiana State University Shreveport’s online Master of Business Administration with an Entrepreneurship and Family Enterprise Specialization program, candidates can study both traditional and modern business plans and how to use them in different situations, such as obtaining funding and integrating customer feedback into future product design and strategy.
What Does a Traditional Business Plan Include?
Though opinions may vary, most business plans should include the following:
An executive summary should succinctly outline the entire business model. In addition to the basic outline, the executive summary should state specifically what the business owner wants. If you, as the entrepreneur, are looking to secure funding from investors, it is best to clarify this from the start.
Your Business and the Market
Following the summary are all aspects of the plan in detail. The business description will define your business and intent, placing it in context of the industry as a whole. Thorough research into your target market should illustrate where your business fits in and how it differs from the competition. These sections of your business plan will demonstrate your knowledge of the market as well as specific marketing and sales strategies you will use to ensure your business’s success.
Product and Design
This section will further describe your product and/or service, its historical development and design, and plans for further development. This should also reinforce what makes your product uniquely beneficial and desirable in a saturated market.
Operations and Organization
You should lay out the specifics of your business’s organization, from management structures to personnel and division responsibilities as well as operational logistics and capital requirements.
The nuts and bolts of a business’s finances generally appear toward the end of a business plan, including historical financial data, projections based on product and market analysis, and requirements for funding at different stages of future development.
Much of the business plan debate comes from the development of lean start-ups. These businesses use an iterative process often referred to as the “build-measure-learn” loop, wherein a business releases a succession of prototypes, revising them constantly based on customer feedback and real-time market data. This allows a business to develop and ideally perfect products rapidly, responding to and keeping up with current technology and market trends. The effectiveness and efficiency of this rapid-response product development model suggests that some businesses don’t need a formal business plan based on years of research and that slower product development has become obsolete.
However, the two models are not exclusive. An effective business plan should constantly evolve with the business and market. Just like the lean start-up model, a business plan is essentially a feedback loop: plan, execute, review, revise. Just as a business plan is most effective when treated as an evolving entity, adding structure to the build-measure-learn loop through clarification and articulation of the iterative process can actually help start-ups achieve quicker and better results. Considered this way, a thoughtful business plan can expedite the cycle of product development.
Developing a sound business plan is an important part of creating a successful business or revamping and improving an existing one. Whether you are trying to achieve quick results with a lean start-up or secure investments and build long-term capital for a developing business venture, learning about the intricacies of effective business plans through an MBA program in entrepreneurial business administration can help you succeed in the competitive business world.
Learn more about the LSUS online MBA in Entrepreneurship program.
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