What is business plan?

A business plan is an outline for an organization’s business development efforts. A plan usually contains the following elements:

1) Business overview, which defines the context in which the plan makes sense. You need to understand how your business fits into the picture. For example, if you have several business units within a business that have different strategic goals and priorities, each of them need its own business plan. But as a whole, this plan should support all the business interests of the company.
2) A description of the business's structure, followed by potential growth and decline phases or crises.
3) Financial plan. The first step in setting a plan is to calculate a target financial statement (the present vs. the future). The financial plan lays the groundwork for the business plan, as it details costs, cash-flow forecasts, investments, and how business and cash-flow will change over time.
There are 5 major types of business plans. Each plan type has its own characteristics, in terms of its requirements:

Organizational plan: In organizational planning you need to plan how the company will operate in the future (its business structure, resources, people, technology, etc.). For example, if each business segment is an independent unit and no one owns the whole company, you need to decide how that company will be structured and how it will work as a whole. Some organizations manage by selling shares in the company and by dividing it among owners, while some manage by transferring ownership or by founding another company, based on some criteria, such as size or market share.

Plan to be realized: When you have a long-term vision and you intend to realize it in the future, you can develop a plan to be realized, which may be your plan in the long run.

Long-term plan: For long-term plans we generally use two types of documents. The first is a budget book (the document that states what resources and activities are to be allocated in a particular year), and a project plan (the document that describes the activities to be carried out over a period of time). The second is a description of your current or past situation. For example, if you are an organization that is considering starting a new business and that also wants to establish a new customer base, you can generate a plan to be executed immediately and define the activities you will carry out to be in line with your current situation (the short-term plan). However, if your intention is to become profitable in future and to reach a certain amount in the current year, you will generate a business plan , which will detail your business activities over the next 3 to 5 years, and is a longer plan covering a longer time frame (as illustrated by Figure 33.2). A good business plan must clearly present the vision of a company, especially during the critical business periods, and the plan can serve as a guide for future decision-making and also as an internal communication tool (i.e., a company's vision).

Future-oriented plan: A typical future-oriented plan aims to achieve your long-term targets, for example by focusing on creating new products, services, and business systems, and then increasing sales so that you reach your target set in the following season. These are called long-term plans. Some organizations include plans for products and services they are planning to introduce in the future. Also, some have planned specific projects (called future-oriented projects) and the costs associated with each one.

Plan to attain: A strategy of the organization aims to make its products or services more and more attractive by increasing product sales in the short term and then making them cheaper and more suitable for the market in the long term. This is called a short-term plan. In an organization aiming to attain its specific goal, you may have several different strategies that can be developed throughout the company and that have their own time frames for achievement, and they might also include different resources, structures, and mechanisms (i.e., different business systems or business units). The strategic plan of an organization that has a particular goal and has a variety of plans for reaching that goal is called multidimensional planning.
Prospecting plan: A plan to seek profitable opportunities and to develop a plan and model of success in order to implement a prospective decision to grow or develop your business. A company may generate one or more prospecting plans, which are often called strategic prospecting plans. Some of the activities that are usually included in these plans are the identification of potential business opportunities, the planning of activities to explore those opportunities, the analysis of the potential, and the evaluation of the prospects.