A business plan is a description of a business and its plans for the next one to three years. It explains what the business does (or will do if it's a new business); it suggests who will buy the product or service and why; it provides financial forecasts demonstrating overall viability; and indicates the finance available and explains the financial requirements.
A simple business plan should be clearly set out under the following headings:
1. Contents page
2. Details about the owner
3. A description of the business
4. An outline of the market
5. Advertising and promotion
6. Premises and equipment
7. How the business is organised
8. A guide to how much it costs to produce the product or service
9. Details of the how the finance will be raised
10. A outline of cash flow in the first year
11. Plans for future expansion.
Business plans are particularly important for new start up businesses, because they provide a framework for the owner to work to. Also if the owner wishes to raise finance from a bank or other lender then it will be essential to provide a clear business plan, so that the bank can feel confident in making a loan.
For larger organisations - the business plan is typically called the 'corporate strategy' based on the American Word Corporation (business) and the term strategy (plan).
The business plan sets out the means by which an organisation will achieve its business objectives. Without a clear plan a business will have little sense of direction.