A business plan is a document that outlines a company’s direction and strategy. Business plans typically:
- Identify a company’s target customers and their needs
- Describe the products and services the company offers to these customers
- Explain how the company will get its products to market and gain more customers
Good business plans are based on real knowledge of the solutions customers want and how they’ll use them. They also specify financial and non-financial targets for each set of customers the company serves. These financial targets are converted into forecasts and budgets and are tied to personal performance measures for company employees, starting with managers and moving down the hierarchy.
A good business plan is executable, meaning it is realistic about what the company can and can’t achieve. To be carried out successfully, a business plan must be supported by good processes, careful monitoring and aligned rewards for the people who do the work.
More about business plans
In business plans, customers are often divided into segments—sub-groups with common needs, concerns and other attributes. If a company has just one customer segment, it needs just a single business plan. If a business has more than one customer segment, it may need different business plans for the different groups.
When customer needs are very different from one segment to the next, a company might require specialized sales teams focused on each segment. An example would be a company that sells to power utilities and educational institutions—each sector will have distinct needs and a distinct sales approach.