Now that we know about strategies (how we’re going to compete externally) and business models (the internal logic of a business), we now need to know about business plans. What are they? How are they different? Why do you need one?
A business plan is the operational details of the business for a specific time period. Typically strategies and models are longer term, while a business plan is shorter term. A business plan consists of the specific actions and activities that will be undertaken to achieve financial and strategic objectives. It is usually bound by timelines and by financial targets. It is used to measure progress. A business plan is concrete.
A business plan covers both internal and external elements of the business. The business plan is the nitty-gritty stuff that outlines how you are going to implement your strategies and business model. Essentially, the business plan ties together your strategic choices and the operational/economic logic of your business.
Business plans are important because they create an executional path. They specify the details of how you plan to achieve your goals and strategies. They create accountability and allow you to measure your progress. They ensure that key projects don’t “slip”. They are an important management tool for a business. The also put your plans on paper , which can help you identify any mistaken logic or operational issues with your proposed plan. Business plans also help communicate the tasks that must be accomplished to staff, and sets priorities for them.
You can’t keep your business plan in your head. It’s important to more than your banker.