No matter how brilliant an idea you have, efficient planning is needed to turn it into reality and achieve results. This applies to any field, but especially to business. That's why a business plan is an important component when you're venturing into the world of entrepreneurship. To make it clear on this subject, we present the analysis by Vadim Culea, who has 18 years of experience in the banking industry and represents the Business Banking Segment Orchestra within maib.
"A business plan is like a map or compass for businesses, comprising from the development idea, funding methods, subsequent actions, market evolution forecasts, resource utilization, challenge management, and other crucial aspects to provide the company with stability and growth prospects.
Business plans can be categorized based on the business objective as follows:
For startups – intended for businesses just starting their journey.
Internal – establishes the medium and long-term strategy on which the company's management will rely.
Operational – includes objectives set for a specific period and describes how these will be achieved.
Expansion or growth – includes market analysis, marketing strategy, sales, forecasts, etc.
What I can say for sure is that there's no one-size-fits-all business plan that addresses all challenges. Essentially, it's an instrument that outlines how objectives will be achieved. However, I'd like to compare two types of business plans that can be helpful for entrepreneurs starting out: the Lean Business Plan, also known as the Canvas, and the classic business plan.
Download the model file here.
Lean Business Plan (Canvas):
It's a visual, one-page tool that provides an overview of the key elements of a business idea. It's very popular among entrepreneurs because it can be quickly understood. It includes the problem to be solved, customer segments, the product or service's unique value, proposed solutions, communication channels with the target audience, revenue and cost forecasts, performance indicators, competitive advantage, and operational expenses.
Pros:
- quick to create;
- flexible and easily adaptable to market or business changes;
- effective for startups looking to test an idea in the market;
- focuses on key aspects of the business.
Cons:
- may appear too simplistic for traditional investors;
- may overlook important business details;
- not always ideal for complex businesses or those requiring significant funding.
Opportunities:
- can be updated frequently to remain relevant;
- ideal for the digital environment and agile businesses;
- can serve as a "sketch" before developing a more detailed business plan;
Threats:
- risk of being perceived as unserious or underdeveloped by potential investors or partners;
- risk of neglecting critical aspects of business planning;
- the application of these methods depends on the nature of the business and the set objectives.
Classic Business Plan:
It's a detailed and structured document with chapters that describe the strategy for achieving objectives, the resources and means involved, and the financing strategy. It's also a presentation tool used for attracting investments or funding.
Structurally, it can include:
- executive summary (general description, objectives, business value or mission, financial information summary);
- business description (business nature and model, vision, mission, history);
- products or services (details about these, how they meet market needs, differentiation from competitors);
- market analysis (target segment, market size and growth potential, trends, competitors);
- strategy and implementation (marketing and sales, operational plan, team and organizational structure);
- management team (key team members and their responsibilities);
- financial plan (revenue and expense forecasts, projected balance sheets, financial projections, required investments).
The classic business plan is more complex and offers an in-depth understanding of the business and a clear view of how it will operate. It includes detailed planning and can be more credible to investors.
Pros:
- comprehensive details, covering every aspect of the business;
- formalized structure, widely recognized, making information easy to find and understand;
- credibility, instilling confidence in traditional investors and banks;
- in-depth financial projections, providing clarity on financial expectations.
Cons:
- consumes significant time and resources;
- less flexible and less adaptable to rapid market changes;
- can become quickly outdated, with details becoming stale.
Opportunities:
- a starting point for funding, as investors and banks often prefer a classic business plan due to its level of detaill
- can be used to gain trust with potential partners or suppliers;
- provides a solid basis for review, helping the company evolve strategically.
Threats:
- digital evolution, making shorter models easier to accept;
- complexity that may deter some stakeholders, especially in startups or small businesses where speed and adaptability are crucial;
- resistance to change, which can lead a company to not react quickly enough to opportunities.
Therefore, classic business plans offer detail and structure, instilling credibility with traditional investors and banks, making them perfect for established industries and substantial funding. On the other hand, canvas-style business plans emphasize agility and adaptability, making them suitable for startups and volatile environments. The choice between the two should be based on specific needs and the business context.”
