What’s the Difference Between Business Strategy and Product Strategy?

business plan vs product

At first glance, it might seem like business strategy and product strategy are two terms that ultimately mean the same thing. Surely the strategy behind the products a company invests in building is the same as the strategy of the company itself?

Both strategies should be aligned. However, there are some key differences between what goes into shaping business strategy vs product strategy. Each one has to be planned out separately, while at the same time ensuring they don’t contradict each other.

Read on and we’ll explain more about the differences between these two strategies, as well as breaking down what each means on their own.

Business Strategy vs Product Strategy: The Key Differences

The main thing to understand about the difference between business and product strategies is in their scopes.

Business strategies are broad. They describe the goals of the whole company, the company's vision, and how to achieve their goals.

In comparison, product strategies are more refined. This comes after business strategy, and is focused specifically on a certain product or feature. The idea is to plan out how to make the product successful (as well as what success looks like), without contradicting the overall business strategy.

The two are clearly linked. Business strategy may put limitations on what the product strategy can look like - for example limits in budget, resources, or time. But as important as it is to align both strategies, it’s just as important to craft each one on their own, to avoid getting too broad with product strategy or too narrow-minded in the overall business strategy.

What is Business Strategy?

Business strategy describes the overall plan and vision of the business as a whole.

This includes the goals or objectives of the business, a plan for how they’re going to achieve these goals, and any boundaries or restrictions they’re working with. It’s essentially the business model, which is what the entire company is built upon.

While there are certainly specifics that go into a business strategy, it also answers the “why”. It lets all facets of the business understand the overall purpose of the business, why the company exists, and why everyone should have an interest in working towards this common goal.

What Effective Business Strategy Looks Like

The business strategy should be focused on high-level goals and objectives, but that’s not to say it should be vague. It should include clear details on the desired direction of the company.

Here are some points or questions that the business strategy should address:

  • What is the overall vision of the company? Why are they in business?
  • Will the company be funded, or self-financed?
  • How fast do they need to achieve profitability? How long is the runway?
  • What are the key performance indicators (KPIs) that the business will focus on?
  • How does the business plan to make sales, get clients or grow awareness? For example, are they going to build a sales team in-house, paid ads, or a combination of multiple channels?
  • What will the company’s brand and image look like?
  • Will the company focus on growing its brand, or be more product-driven?
  • Will the company look to address existing markets, or a new market?
  • What will be their competitive advantage that allows them to take market share? Is it by offering lower prices, higher quality or unique products or services, or by being the first to an underserved market?

Business strategy could also include details about company culture, whether the company is remote or in-house, or what the structure of the company looks like.

The above is a lot to think about. But it’s important for the business strategy to be presented in a way that’s clear and understandable, so that the product strategy (or marketing strategy, or any other aspect of the business) can create their own plan that falls in line with the company strategy.

Who Owns Business Strategy?

Senior leadership should take ownership of the business strategy. It should come from the very top, which will empower department heads and others lower down the ladder to make decisions, knowing the overall vision of the business as a whole.

Depending on the size of the company, this could be the C-level executive team, a board of directors, or for smaller businesses, just the founder/co-founders.

What is Product Strategy?

Product strategy pertains only to a part of the business (albeit a large part). This could be the entire product portfolio, individual products, or in some cases even individual features within a product.

The product strategy describes how the product will succeed, and what success means. It’s focused a lot more on the “what”, as opposed to the “why”, as the business strategy is.

The product strategy should also touch on how the product, and the product strategy itself, fits into the vision or strategy of the whole company.

product strategy.png

What Effective Product Strategy Looks Like

A clear and effective product strategy should use strategic thinking to provide a plan for how the product is going to get made, how it will benefit the business, how you’re going to promote it and find a market for the product, and what metrics you’ll use to decide whether or not the product is successful.

Here are some questions or points to include in your product strategy:

  • Who are our target users or buyers?
  • What pain points or value propositions is our product made for?
  • How does this product line up with the business objectives?
  • Are there any competing or existing products that we’re trying to replicate, or improve on?
  • Which features make our product stand out? How will it achieve product-market fit?
  • What is the time frame or roadmap for launching this product, or features of the product?
  • What’s the monetization strategy for the product? How are we going to sell it? How will it be priced?
  • How do we define success for the product?

When creating a strategy for an individual product within a portfolio of individual products, or a specific feature within a product, the strategy should also explain how these products or features work together (or alternatively, if they’re supposed to act as standalone products).

Who Owns Product Strategy?

This again depends on the size and the state of the company.

Generally, whoever is the head of product will be responsible for shaping the company’s overall product strategy. This could be the Chief Product Officer or VP of Product in larger organizations, or in a smaller startup, it could be the job of product managers, or in some cases the founder.

When a company is first starting out, the product strategy is usually laid out by the executive and/or founding team. Then going forward, the company may establish a dedicated product team, and they will be responsible for the product strategy from then on.

Example of Business Strategy vs Product Strategy

Let’s say we have a small software startup. We'll write a quick example of the strategic objectives of the business, first, and then of the product team.

The business strategy could be that the company will be lean and bootstrapped - meaning they won’t seek outside funding or investors. The aim of the business is to be profitable within 1 year, and they will do that by generating SEO traffic, as well as running paid ads.

The business will focus on building an authoritative brand that their target market trusts. They’ll use this brand image to launch solutions to various pain points in the target market, with their competitive advantage being superior customer service.

The product strategy is to launch a product centered around a specific high-volume search term that describes a pain point for their target market. The product will be presented as a better solution to this pain point than anything that already exists on the market, which they will explain primarily via content marketing.

Their product strategy lays out specific metrics in terms of conversion rate, sales and profitability that will make the product a success. It also plots the roadmap for when they plan to launch it, and an ongoing plan to collect customer feedback and work this into improving the product after its initial launch.

In reality, the business and product strategies are likely to be more in-depth than the examples above, but this should give you an idea of the difference between each one.

Why It’s Important for Business Strategy and Product Strategy to Work Together

It’s more important for business and product strategy to align than arguably any other areas of the business.

In most cases, product drives the business. It’s how the business is going to reach their KPIs, achieve profitability, and take market share.

So the product strategy has to ultimately work towards the goals and vision outlined in the business strategy.

It also has to work within the confines set out in the business strategy. For example, if the business strategy states that they need to be profitable within 3 months, the product strategy can’t be to do several months’ worth of market research before launching a free product that will eventually, but not immediately, be monetized.

That’s why the executive team, or the founders in a smaller-scale startup, are often strongly involved in product management . At the very least, they’re likely to have an input on the product strategy, in order to make sure it’s working towards, and within, the wider-reaching business model.

Summing Up: Business Strategy vs Product Strategy

The business strategy of a company is one of the first, and most important things to decide on. Product strategy comes later, but is just as important. And despite a common misconception, the two are quite different, though aligned towards the same overall vision.

The easy way to differentiate the two is to see business strategy as the overall, big-picture strategy of the business, while product strategy is more detail and process-oriented, focused specifically on the company’s product(s), and how they’ll fit together.

If you’re a product manager , or aspire to have a career in product management , you’ll want to know precisely how to craft an effective product strategy. You should also have a good knowledge of tools that can help you plot out elements of product strategy, such as which features to prioritize, and a product roadmap to visualize it.

FeedBear’s customer feedback collection and roadmapping tools are perfect for startups and product teams of all sizes. Try it free for 14 days to see how connecting with your customers can help you craft a winning product strategy.

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Product April 10, 2009 Marty Cagan

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Business Strategy vs. Product Strategy

In keeping with my recent theme of product planning, I’d like to focus in this article on an important distinction and source of frustration in many companies, and that has to do with the differences between business strategy and product strategy.

Many companies confuse or blur the two, and the result is easy to spot. The senior executives want to focus on the business strategy, but they find they are forced to make decisions at a level far below where they’re comfortable or usually even interested, such as which specific products, projects and even features to invest in, and what the interdependencies are between these features and projects, and often what is on the actual page and how to resolve conflicts.

And on the other side, the product managers feel like they don’t understand the reasons behind decisions that directly impact their products, they feel like the strategy is guard-railing every few months, and they don’t feel empowered to do their jobs.

Very often I’ll attend a product planning session with senior executives and they’re being presented with lots of detailed product plans but without the business context. When I ask where the business strategy is, I’ll often get a blank look. The team wants to make more money so these are the features they want to add, or so their reasoning goes.

Business strategy is about identifying your business objectives and deciding where to invest to best achieve those objectives. For example, moving from a direct sales model (your own sales force selling directly to customers) to an online sales model (your customers buy from your site) is a business strategy. Deciding whether to charge for your services with subscriptions or transactions fees or whether you have an advertising-based revenue model is a business strategy. Deciding to move into an adjacent market is a business strategy.

Now, clearly there are some big product implications to each of these business strategies. But they are not one in the same. There are lots of ways to sell online, lots of ways to monetize value, and lots of ways to develop or acquire and integrate an adjacent offering. The product strategy speaks to how you hope to deliver on the business strategy.

Moreover, while the business may believe something is a great business opportunity, you don’t yet know if your company can successfully deliver on this opportunity. Maybe it will cost too much to build. Maybe customers won’t value it enough to pay for it. Maybe it’ll be too complicated for users to deal with. This is where product strategy and especially product discovery come into play.

The business maintains a portfolio of investments, and the business can and should adjust that portfolio mix as businesses and markets develop.

Take as an example Amazon. They’ve got a portfolio of investments including their core e-commerce offerings by category, they’ve got third-party selling, they’ve got an infrastructure technology (cloud computing) business, and they’ve even got their own growing consumer electronics business (love that Kindle 2). I especially like Amazon as an example because they illustrate so many points of good business strategies (and good product strategies).

Amazon may have made their business in selling hardcopy books and they’ve been a great innovator there, but instead of spending all their time trying to protect that business, they’ve also got an investment that could one day revolutionize that entire business. To Amazon’s credit, they realize that if they don’t pursue this someone else probably will. Similarly, they have worked hard to create innovative technologies to allow them to provide a differentiated e-commerce customer experience, yet they also have been leaders in making that technology available to others (Amazon Web Services) because it’s possible that cloud computing business will one day be even larger than what they can ever do themselves as an online retailer.

That’s a business strategy and you can see their portfolio planning. Now each of these businesses has one or more product strategies. As an Amazon user you can see the evolution of the e-commerce retailing business. You can also see the evolution of the Amazon Web Services product line; every few months another piece of the puzzle is launched. You can see the evolution of the electronic reader and the supporting technologies.

Think of it this way. The business strategy and business portfolio planning provides a budget and a set of business metrics. The product organization then lives within that budget to pursue as aggressively as possible the best ways to hit those business metrics.

Some product strategies will prove more successful than others, and this will impact the business portfolio planning. And not every business of course will resonate with customers, so a big part of business strategy is knowing when to continue to invest and knowing when to cut your losses so that you can invest elsewhere.

Two key techniques to help with these investment decisions are Opportunity Assessments (see https://svpg.com/assessing-product-opportunities ) and Product Discovery (see https://svpg.com/product-discovery ). What’s most important however is to make sure you’re asking the right questions and making the hard decisions (see https://svpg.com/the-seven-deadly-sins-of-product-planning ).

So business owners and senior executives are responsible for the business strategy and the business portfolio planning, and the product organization (especially the directors of product management) are responsible for the product strategy and the product portfolio planning. Keep these two concepts straight and I think you’ll find that you will have more clarity and understanding in terms of objectives and responsibilities, as well as better managed business and product portfolios.

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What is a Business Plan? Definition, Tips, and Templates

AJ Beltis

Published: June 07, 2023

In an era where more than 20% of small enterprises fail in their first year, having a clear, defined, and well-thought-out business plan is a crucial first step for setting up a business for long-term success.

Business plan graphic with business owner, lightbulb, and pens to symbolize coming up with ideas and writing a business plan.

Business plans are a required tool for all entrepreneurs, business owners, business acquirers, and even business school students. But … what exactly is a business plan?

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In this post, we'll explain what a business plan is, the reasons why you'd need one, identify different types of business plans, and what you should include in yours.

What is a business plan?

A business plan is a documented strategy for a business that highlights its goals and its plans for achieving them. It outlines a company's go-to-market plan, financial projections, market research, business purpose, and mission statement. Key staff who are responsible for achieving the goals may also be included in the business plan along with a timeline.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

What is a business plan used for?

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

Business Plan Template [ Download Now ]

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Working on your business plan? Try using our Business Plan Template . Pre-filled with the sections a great business plan needs, the template will give aspiring entrepreneurs a feel for what a business plan is, what should be in it, and how it can be used to establish and grow a business from the ground up.

Purposes of a Business Plan

Chances are, someone drafting a business plan will be doing so for one or more of the following reasons:

1. Securing financing from investors.

Since its contents revolve around how businesses succeed, break even, and turn a profit, a business plan is used as a tool for sourcing capital. This document is an entrepreneur's way of showing potential investors or lenders how their capital will be put to work and how it will help the business thrive.

All banks, investors, and venture capital firms will want to see a business plan before handing over their money, and investors typically expect a 10% ROI or more from the capital they invest in a business.

Therefore, these investors need to know if — and when — they'll be making their money back (and then some). Additionally, they'll want to read about the process and strategy for how the business will reach those financial goals, which is where the context provided by sales, marketing, and operations plans come into play.

2. Documenting a company's strategy and goals.

A business plan should leave no stone unturned.

Business plans can span dozens or even hundreds of pages, affording their drafters the opportunity to explain what a business' goals are and how the business will achieve them.

To show potential investors that they've addressed every question and thought through every possible scenario, entrepreneurs should thoroughly explain their marketing, sales, and operations strategies — from acquiring a physical location for the business to explaining a tactical approach for marketing penetration.

These explanations should ultimately lead to a business' break-even point supported by a sales forecast and financial projections, with the business plan writer being able to speak to the why behind anything outlined in the plan.

business plan vs product

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Free Business Plan [Template]

Fill out the form to access your free business plan., 3. legitimizing a business idea..

Everyone's got a great idea for a company — until they put pen to paper and realize that it's not exactly feasible.

A business plan is an aspiring entrepreneur's way to prove that a business idea is actually worth pursuing.

As entrepreneurs document their go-to-market process, capital needs, and expected return on investment, entrepreneurs likely come across a few hiccups that will make them second guess their strategies and metrics — and that's exactly what the business plan is for.

It ensures an entrepreneur's ducks are in a row before bringing their business idea to the world and reassures the readers that whoever wrote the plan is serious about the idea, having put hours into thinking of the business idea, fleshing out growth tactics, and calculating financial projections.

4. Getting an A in your business class.

Speaking from personal experience, there's a chance you're here to get business plan ideas for your Business 101 class project.

If that's the case, might we suggest checking out this post on How to Write a Business Plan — providing a section-by-section guide on creating your plan?

What does a business plan need to include?

  • Business Plan Subtitle
  • Executive Summary
  • Company Description
  • The Business Opportunity
  • Competitive Analysis
  • Target Market
  • Marketing Plan
  • Financial Summary
  • Funding Requirements

1. Business Plan Subtitle

Every great business plan starts with a captivating title and subtitle. You’ll want to make it clear that the document is, in fact, a business plan, but the subtitle can help tell the story of your business in just a short sentence.

2. Executive Summary

Although this is the last part of the business plan that you’ll write, it’s the first section (and maybe the only section) that stakeholders will read. The executive summary of a business plan sets the stage for the rest of the document. It includes your company’s mission or vision statement, value proposition, and long-term goals.

3. Company Description

This brief part of your business plan will detail your business name, years in operation, key offerings, and positioning statement. You might even add core values or a short history of the company. The company description’s role in a business plan is to introduce your business to the reader in a compelling and concise way.

4. The Business Opportunity

The business opportunity should convince investors that your organization meets the needs of the market in a way that no other company can. This section explains the specific problem your business solves within the marketplace and how it solves them. It will include your value proposition as well as some high-level information about your target market.

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5. Competitive Analysis

Just about every industry has more than one player in the market. Even if your business owns the majority of the market share in your industry or your business concept is the first of its kind, you still have competition. In the competitive analysis section, you’ll take an objective look at the industry landscape to determine where your business fits. A SWOT analysis is an organized way to format this section.

6. Target Market

Who are the core customers of your business and why? The target market portion of your business plan outlines this in detail. The target market should explain the demographics, psychographics, behavioristics, and geographics of the ideal customer.

7. Marketing Plan

Marketing is expansive, and it’ll be tempting to cover every type of marketing possible, but a brief overview of how you’ll market your unique value proposition to your target audience, followed by a tactical plan will suffice.

Think broadly and narrow down from there: Will you focus on a slow-and-steady play where you make an upfront investment in organic customer acquisition? Or will you generate lots of quick customers using a pay-to-play advertising strategy? This kind of information should guide the marketing plan section of your business plan.

8. Financial Summary

Money doesn’t grow on trees and even the most digital, sustainable businesses have expenses. Outlining a financial summary of where your business is currently and where you’d like it to be in the future will substantiate this section. Consider including any monetary information that will give potential investors a glimpse into the financial health of your business. Assets, liabilities, expenses, debt, investments, revenue, and more are all useful adds here.

So, you’ve outlined some great goals, the business opportunity is valid, and the industry is ready for what you have to offer. Who’s responsible for turning all this high-level talk into results? The "team" section of your business plan answers that question by providing an overview of the roles responsible for each goal. Don’t worry if you don’t have every team member on board yet, knowing what roles to hire for is helpful as you seek funding from investors.

10. Funding Requirements

Remember that one of the goals of a business plan is to secure funding from investors, so you’ll need to include funding requirements you’d like them to fulfill. The amount your business needs, for what reasons, and for how long will meet the requirement for this section.

Types of Business Plans

  • Startup Business Plan
  • Feasibility Business Plan
  • Internal Business Plan
  • Strategic Business Plan
  • Business Acquisition Plan
  • Business Repositioning Plan
  • Expansion or Growth Business Plan

There’s no one size fits all business plan as there are several types of businesses in the market today. From startups with just one founder to historic household names that need to stay competitive, every type of business needs a business plan that’s tailored to its needs. Below are a few of the most common types of business plans.

For even more examples, check out these sample business plans to help you write your own .

1. Startup Business Plan

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As one of the most common types of business plans, a startup business plan is for new business ideas. This plan lays the foundation for the eventual success of a business.

The biggest challenge with the startup business plan is that it’s written completely from scratch. Startup business plans often reference existing industry data. They also explain unique business strategies and go-to-market plans.

Because startup business plans expand on an original idea, the contents will vary by the top priority goals.

For example, say a startup is looking for funding. If capital is a priority, this business plan might focus more on financial projections than marketing or company culture.

2. Feasibility Business Plan

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This type of business plan focuses on a single essential aspect of the business — the product or service. It may be part of a startup business plan or a standalone plan for an existing organization. This comprehensive plan may include:

  • A detailed product description
  • Market analysis
  • Technology needs
  • Production needs
  • Financial sources
  • Production operations

According to CBInsights research, 35% of startups fail because of a lack of market need. Another 10% fail because of mistimed products.

Some businesses will complete a feasibility study to explore ideas and narrow product plans to the best choice. They conduct these studies before completing the feasibility business plan. Then the feasibility plan centers on that one product or service.

3. Internal Business Plan

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Internal business plans help leaders communicate company goals, strategy, and performance. This helps the business align and work toward objectives more effectively.

Besides the typical elements in a startup business plan, an internal business plan may also include:

  • Department-specific budgets
  • Target demographic analysis
  • Market size and share of voice analysis
  • Action plans
  • Sustainability plans

Most external-facing business plans focus on raising capital and support for a business. But an internal business plan helps keep the business mission consistent in the face of change.

4. Strategic Business Plan

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Strategic business plans focus on long-term objectives for your business. They usually cover the first three to five years of operations. This is different from the typical startup business plan which focuses on the first one to three years. The audience for this plan is also primarily internal stakeholders.

These types of business plans may include:

  • Relevant data and analysis
  • Assessments of company resources
  • Vision and mission statements

It's important to remember that, while many businesses create a strategic plan before launching, some business owners just jump in. So, this business plan can add value by outlining how your business plans to reach specific goals. This type of planning can also help a business anticipate future challenges.

5. Business Acquisition Plan

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Investors use business plans to acquire existing businesses, too — not just new businesses.

A business acquisition plan may include costs, schedules, or management requirements. This data will come from an acquisition strategy.

A business plan for an existing company will explain:

  • How an acquisition will change its operating model
  • What will stay the same under new ownership
  • Why things will change or stay the same
  • Acquisition planning documentation
  • Timelines for acquisition

Additionally, the business plan should speak to the current state of the business and why it's up for sale.

For example, if someone is purchasing a failing business, the business plan should explain why the business is being purchased. It should also include:

  • What the new owner will do to turn the business around
  • Historic business metrics
  • Sales projections after the acquisition
  • Justification for those projections

6. Business Repositioning Plan

businessplan_6 (1)

When a business wants to avoid acquisition, reposition its brand, or try something new, CEOs or owners will develop a business repositioning plan.

This plan will:

  • Acknowledge the current state of the company.
  • State a vision for the future of the company.
  • Explain why the business needs to reposition itself.
  • Outline a process for how the company will adjust.

Companies planning for a business reposition often do so — proactively or retroactively — due to a shift in market trends and customer needs.

For example, shoe brand AllBirds plans to refocus its brand on core customers and shift its go-to-market strategy. These decisions are a reaction to lackluster sales following product changes and other missteps.

7. Expansion or Growth Business Plan

When your business is ready to expand, a growth business plan creates a useful structure for reaching specific targets.

For example, a successful business expanding into another location can use a growth business plan. This is because it may also mean the business needs to focus on a new target market or generate more capital.

This type of plan usually covers the next year or two of growth. It often references current sales, revenue, and successes. It may also include:

  • SWOT analysis
  • Growth opportunity studies
  • Financial goals and plans
  • Marketing plans
  • Capability planning

These types of business plans will vary by business, but they can help businesses quickly rally around new priorities to drive growth.

Getting Started With Your Business Plan

At the end of the day, a business plan is simply an explanation of a business idea and why it will be successful. The more detail and thought you put into it, the more successful your plan — and the business it outlines — will be.

When writing your business plan, you’ll benefit from extensive research, feedback from your team or board of directors, and a solid template to organize your thoughts. If you need one of these, download HubSpot's Free Business Plan Template below to get started.

Editor's note: This post was originally published in August 2020 and has been updated for comprehensiveness.

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

business plan vs product

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

  • A business plan is a document describing a company's business activities and how it plans to achieve its goals.
  • Startup companies use business plans to get off the ground and attract outside investors.
  • For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
  • There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

  • Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
  • Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
  • Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
  • Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
  • Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

  • Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
  • Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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Business Roadmaps vs. Product Roadmaps

Business Roadmaps vs. Product Roadmaps

Roadmaps make strategy work. This is particularly true at the business level. Roadmaps are useful for visualizing the plan for how the organization as a whole will achieve the company's longer-term vision. Business roadmaps also have a unique relationship with product roadmaps — one that is important for both executive and product teams to understand.

Successful businesses are powered by great strategy at both the business and individual product level.

We have seen more company leaders looking to Aha! to help drive organizational success with business roadmaps. Strategic planning at the company level — setting a timeline for goals across the business — is essential always, but especially during challenging world events. Roadmaps are flexible enough to allow executive teams to visualize plans for growth , share with the broader team, and update as things change.

It would be easy to assume that business roadmaps should guide the direction of or even overlap with product roadmaps. This may seem so within small organizations that are largely centered around one product. In these companies, business and product planning are often the same. The product roadmap steers the ultimate success of the company.

But for most companies, the executive team benefits from creating higher-level goals and initiatives for the entirety of the organization. These plans supersede what any individual product team will be working on. And the larger the enterprise, the more teams and products there are to manage and support.

It is important to understand how business and product roadmaps relate to one another.

The right balance puts your company in the best position to be successful. Here is a breakdown of what should go into each roadmap and where the two harmonize:

A business roadmap contains broad goals that are focused on the success of a company as a whole. Business-wide goals typically focus on revenue growth, market expansion, hiring and development, and cost-saving process improvements, for example. Supporting those business goals is part of the strategy set within each functional group across the organization.

A product roadmap contains measurable and time-bound goals that are specific to a product and its users, such as increased adoption of certain functionality or product-specific revenue. Product managers typically align product goals with one or more business-level goals.

Initiatives

The initiatives within a business roadmap are high-level focus areas that help the organization achieve the company goals. If a company's goal is market leadership, the executive team might set an initiative to create faster innovation cycles. In many cases, the leaders within each functional group, such as the VP of product or the VP of marketing, heavily influence the business initiatives relevant to their department.

The initiatives within a product roadmap are themes of work that will help achieve the product's goals. Product initiatives include work that directly impacts the customer, such as new feature sets or performance improvements. In larger organizations with many products, it is not uncommon for these initiatives to be relevant to that specific product and its users only.

Business roadmaps are typically created annually. Some organizations might build longer-term roadmaps that visualize three- or even five-year plans. While business roadmaps might include key milestones such as entering a new target market as part of a geographic segmentation initiative, they generally do not include timelines that visualize tactical work.

A product roadmap typically includes timelines in the form of releases , which are containers of work that must be completed to launch new customer experiences. These can happen weekly, monthly, or even less often for complex products. Releases are often presented via a Gantt chart that shows phases, milestones, and dependencies that must be met to deliver the work on schedule.

Everyday work

Business roadmaps rarely capture day-to-day work. Generally, incremental units of work are planned within roadmaps at the department level. But business roadmaps might visualize cross-functional work at a very high level, showing how each department is contributing to overall organizational goals.

A product roadmap captures the nitty-gritty work that a product team needs to complete within each release. Product-level work is typically defined in the form of features and requirements that are then developed by the engineering team. This work should always move product goals and initiatives forward, which helps achieve business-wide goals.

Roadmapping is valuable for any team that wants to visualize a plan and take action.

Most organizations benefit from effective roadmapping at both the business and product level. This requires deep thinking about goals and initiatives at every level of the organization.

Roadmap the future with Aha! — sign up for a free 30-day trial .

Frequently asked questions about business roadmaps

What is the purpose of a business roadmap?

A business roadmap captures a high-level overview of what a company is trying to achieve and when. Company leaders create a business roadmap to help ensure the success of the entire organization — clarifying where the company is headed and aligning the broader team around goals and a timeline for completion.

What should be included in a business roadmap?

At a basic level, a business roadmap should include the company's big picture goals and initiatives, along with a time frame for when the team will accomplish them. Some business roadmaps might also show an overview of how each cross-functional group in the organization is contributing to the overall business goals. Typically a business roadmap will include goals such as market leadership, market expansion, or revenue growth. Common business-wide initiatives include high-level efforts such as creating faster innovation cycles or segmenting customers geographically.

What does a successful company's business strategy roadmap look like?

A business roadmap will look different depending on the company and what it is trying to achieve. For example, a strategic roadmap for a startup or small company will likely be oriented around a single offering. On the other hand, a business roadmap for a large organization will probably be more complex — including multiple initiatives related to different products or areas of focus across the organization. No matter what type of business roadmap you are creating, remember to capture your overall strategy and plan for business growth.

What is the difference between a business roadmap and a business plan?

Business roadmaps and business plans are sometimes used synonymously. But there are some important distinctions. A business roadmap is a strategic plan for what the company is aiming to accomplish and when it will do so. A business plan is a more detailed document that captures how the organization will achieve its objectives. For example, a business plan might detail a company's strategy for developing a new product or entering a new market. You can use a business plan to define the problem you are trying to solve, summarize key details about your target customers, and explain what makes your product different than competitors' offerings. Typically, company leaders draft a more detailed business plan after creating a business roadmap.

How do I create a roadmap for my business?

Many executives create a business roadmap on an annual basis, but others opt to make longer-term plans for the next three to five years. What matters is that you understand the best practices for business roadmaps. To summarize, you should include company-wide objectives and a timeline for meeting them. Remember to keep the roadmap high-level and not tactical — you can create other types of roadmaps (such as product roadmaps) to visualize the tactical work needed to achieve the company goals. And make sure to update your business roadmap as company priorities shift. This keeps everyone in the organization aligned on where you are headed and what you are trying to accomplish.

How do you plan your future business?

It is wise to invest meaningful thought into planning any future business. Creating a business roadmap for a new company, also called a startup roadmap, can help you set your company up for success. Before getting started building your roadmap, define your vision and strategy — why are you starting a company, and what core problem will you solve? Your new business will likely center around a single product idea at first, but you can always add additional products and offerings as you grow. Creating a strong business roadmap at the beginning will help you build a sustainable company that lasts over the long term.

Brian de Haaff

Brian de Haaff

Brian seeks business and wilderness adventure. He is the co-founder and CEO of Aha! — the world’s #1 product development software — and the author of the bestseller Lovability and The Startup Adventure newsletter. Brian writes and speaks about product and company growth and the journey of pursuing a meaningful life.

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Business Plan vs. Business Proposal: Everything You Need to Know

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“Ok, so you sell things.”

Well, honestly, I wasn’t surprised or peeved at the half-baked knowledge of my friend’s father when he made a snap judgment and conveniently labeled my marketing profession as sales.

After all, this wasn’t my first time when someone tagged me as a salesperson. So, I took a deep breath and explained to him how sales are different from marketing.

We, humans, dwell in a herd mentality and hone our word skills from our surroundings. Sometimes, we are simply careless, sometimes oblivious, but most of the time, we actually don’t know that the word has a different meaning.

This can be ignored in a casual conversation, but using the wrong words in a business space can change the implied meaning and lead to miscommunication. For example, cost vs. price , digitization vs. digitalization , warranty vs. guarantee , machine learning vs. artificial intelligence , etc.

“Don’t use words too big for the subject. Don’t say ‘infinitely’ when you mean ‘very’; otherwise you’ll have no word left when you want to talk about something really infinite.” – C. S. Lewis

This Process Street guest post untangles the confusion between two crucial terms – business plan and business proposal. These are used interchangeably in the business world, but their meaning and application are pretty different.

Words are the building blocks of communication. There is a French phrase for using the right word – le mot juste .

Let us strive for le mot juste !

Hop on and be a part of this fantabulous journey.

What is a business plan?

What is a business proposal, business plan vs. business proposal: what are the differences.

  • Bonus: How to make ‘wow’ business plans and business proposals?

Winding-up: Key takeaways

Here we go! 🚀

A business plan is a formal guide that acts as a blueprint, deciphering every root and branch to make a business successful. It is a written document that provides insights to internal and external stakeholders on business vision, goals, and strategies to achieve those goals.

“Without a plan, even the most brilliant business can get lost. You need to have goals, create milestones and have a strategy in place to set yourself up for success.” – Yogi Berra

A business plan, at its core, is an explanation of the below questions –

  • Who are we?
  • What are our offerings?
  • Who are our customers?
  • Who are the competitors?
  • What is our competitive advantage?
  • What are the business projections?
  • What is the roadmap to achieve the goals – marketing, operations, research and development, manufacturing, and financial plans?
  • What are the funding/investment requirements?
  • What is the return on investment?

Why do you need a business plan?

A business plan is not a bag of puffery statements. It is a document with factual information necessary for the survival of a business. You can create a business plan with the right tools or opt for a good business coach to get you started.

Let’s see what Tim Berry , business plan expert, founder and chairman of Palo Alto Softwar and bplans.com , has to say on business plans.

“What I love most about business plans is the business planning: like walking, it’s constant correction and review and revision. Planning, done right, is steering a business, managing growth, aiming the business towards the right future.” – Tim Berry ,  Small Business Trends

According to a study done by Palo Alto Software, those who create business plans double their chances to succeed in business .

Let us get down to brass tacks and understand why a business plan is super-duper important.

business plan

Record and present business information 💾 The primary intent of a business plan is to record and communicate information. It must document the business goals and the methods to attain those goals in a structured manner. It keeps businesses on track with their objectives.

A blueprint for seeking business investment 🗄️ Whether you are a fledgling start-up or an established business seeking expansion or diversification, writing a winning business plan acts as a magnet to attract investors. It builds confidence and trust among investors about the lucrativeness of a business idea.

Lay down the right path ✔️ Not everything discussed verbally at an ideation stage transforms into reality in a pragmatic environment. Jotting down a business plan differentiates achievable from impracticable based on market dynamics, opportunities and threats, and company’s strengths and weaknesses. It sets the right track for business growth.

Establish short-term and long-term goals 🎯 A business plan sets down short-term and long-term goals and the direction to accomplish them, right from baby steps to giant leaps. It becomes a basis to revisit the goals from time-to-time and make iterations depending on the present scenario.

“Any business plan won’t survive its first encounter with reality. The reality will always be different. It will never be the plan.” – Jeff Bezos, CEO of Amazon

Get clarity on your business 🙋 A frequent question that pops-up in business discussions is: “Are we doing it right?”

A well-articulated business plan brings insightful knowledge on each aspect of a business – from what it has to offer to how to market the offerings.

Make informed decisions 💡 A business plan is a reality check to track what is being fruitful and what is causing hindrance. It paves the way to make a business sustainable.

Predict future financial performance 📈 Financial projection is the spotlight of a business plan. It’s the carrot that captivates the eyeballs and tickles investors to fund a new business.

A promising business plan talks about the company’s future financial performance – expenditure, profit, revenue, etc.

Explore new business opportunities 💰 A business plan is a flexible document that enables learning on the go. It bolsters research and infuses businesses with new and more feasible business opportunities. It gives organizations a fresh outlook and ushers them to be a howling success.

How to prepare for a business plan

Now that we have answered the ‘what’ and ‘why’ of a business plan, let us move forward to solve the next riddle – how do you prepare it?

business plan preparation

Identify your company’s vision, mission, and values 🎯 Start by answering and figuring out your business personality:

  • What do you desire to be?
  • How do you want to be perceived?
  • What values put your business in motion?

This is your organization’s compass that acts as a foundation for the succeeding steps.

Know your target audience 🧑‍💼 Dig deep into:

  • Whom are you going to cater to?
  • What is your target market?
  • What is the size and potential of the target market?
  • What are the needs of a prospective customer?
  • How are the needs addressed presently?

Learn market trends 💹 Identifying market trends keeps businesses ahead of the game. Analysis of industry data leads to business growth and profitability in the long run.

Weigh in the impact of unforeseen circumstances 🤦 From financial turbulence to natural calamities and pandemics – a lot can go wrong in the future and leave a business shaking. Expect the unexpected and gird your loins for these testing times.

How to write a business plan

Creating a winning business plan increases the chances of success and spurs investors to fund your business.

According to a study published in Small Business Economics , entrepreneurs that create a plan are 152% more likely to start their business and appoint a registered agent and 129% more likely to push forward with their business beyond the initial start-up phase and grow it.

Here are the key components of an excellent business plan:

Executive summary First impression is the last impression!

An executive summary is a crucial part of this document. It provides the essence of the whole plan:

  • Company details;
  • Size and scope of business opportunity;
  • A description of your offerings and how it will solve the problem;
  • Growth projection;
  • Financial requirements.

It should be informative and able to spark readers’ interest to know more about the business plan.

Overview of the business This section lists down information on:

  • Your business;
  • Your target market;
  • Description of your products/services;
  • Why and how your offerings are a great fit for prospective customers;
  • Your capabilities to handle the demands;
  • Your value proposition and competitive advantage.

…and all other related details.

Market analysis and strategies Put forth a strong case built on the solid rock of data analysis and statistics – present data on target market size, industry trends, sales forecasts, and marketing strategy.

Operating plan The operating plan highlights the operational requirements for the smooth functioning of a business. It includes facilities, supply chain management, inventory, manufacturing, shipment, logistics, staff management – everything under the sun that covers capital and expense (CapEx) requirements.

Growth plan This section answers the question: “Where do you see the business going in the next few years?” It provides visibility to investors on the milestones and how you will make money in near future.

Marketing plan Thee marketing plan section describes how to market the offerings to create and fulfill customers’ needs (who are the customers, product positioning, pricing policy, and promotional strategies?)

Management plan This section outlines how your organization is structured and basically how strong you are together. It describes the skills, background, and responsibilities of the management team. It builds conviction that the business is in good hands and has a proficient human capital.

Financial plan and projections This is the part where numbers become the king.

It draws up deets on inflow and outflow of money, sales forecast, profit and loss statement, balance sheet, cash flow statement, and budget expense. It discloses and forecasts the company’s financial goals, profitability model, and charts a course for the coming years.

Conclusion and appendix Conclude the business plan by succinctly bringing out the key pointers – the business’s vision, mission, goals, strengths, and growth trajectory. Make it compelling and to-the-point. Add relevant appendices to strengthen your business plan.

Pro tip: Use an all-inclusive ready-made business plan template document and Process Street ‘s business plan workflow to create unbeatable business plans.

Business Plan Workflow

Click here to access the Business Plan Checklist!

Types of business plans

There are varying types of business plans depending on the purpose and usage:

  • Business plan for start-ups A winning start-up business plan can be a game-changer to attract funding from investors. It should weave all key components to make it a promising investment – company overview, products/services, estimated costs, market evaluation, competition insights, risk analysis, cash flow projections, marketing strategies, and the management team’s strengths.
  • Strategic business plan It lays down the details of a company’s strategies to fulfill its goals. It outlines the company’s vision, mission, strategy, and goals, the driving force for success, and the timelines.
  • Internal business plan This plan moves the needle and steers focus on in-house planning and growth. It ensures that everyone grasps the company’s overall plan for growth. It prepares organizations to move forward by identifying and removing any blockages and assess and revise the strategies when required.
  • Operations business plan It is an internal plan that maps out the nitty-gritties of a company’s operations plans and activities.
  • Development business plan This is a development or an expansion plan of a business. It is used for both internal and external purposes. An external growth plan is written to attract investment from external sources. An internal development plan counts on its own business capabilities, revenue, and resources. It works as a guide to provide the right directions.
  • Feasibility business plan A company scouts out a feasibility study when it plans to foray into a new venture, new product, or a new market. It articulates: How well will the product or service perform? Is the business promising? What is the expected return on investment (ROI)?
  • What-if business plan At a point where you face unordinary conditions, you need a variation on the existing plan. A what-if business plan arranges to fall back on a contingency plan when things go sideways. For example, an unexpected surge in demand, new competition, drop in market size, etc.

A business proposal is the mantra that draws you closer to win a customer or bag a project.

Generally, it is a formal response to a Request for Proposal (RFP) sent by a prospective client looking for the right solution to their problems. It explains the particulars of a seller’s offerings and convinces the buyer that the proposed solution is the gateway to their business’s success and productivity.

“And, after all, winning business is what writing proposals is all about.” ― Tom Sant, Persuasive Business Proposals: Writing to Win More Customers, Clients, and Contracts

A business proposal comprises of four main points :

  • What are the challenges of prospective clients?
  • How can our solution solve their problems?
  • Why should they choose us over others?
  • What are the best pricing options available?

Why do you need a business proposal?

business proposal

A business proposal is a testimony in itself that asserts, “I am the best you can get.”

Here are the reasons why you should and must make a business proposal :

  • Create or leverage a business opportunity 💲 The prime motive is to win, win, and win! It is a medium to encash a business opportunity by putting forward an I-can’t-say-no-to-this proposal.
  • Stand out from the competition 🏆 It persuades the prospects that you are way ahead of other rivals in the industry in terms of the value you offer.

How to prepare for a business proposal

The heart of preparedness is research and further research. 🔍 After all, the devil is in the details.

Talk to prospective customers, visit their website(s), read published articles, and be a know-it-all for your prospective clients.

Sort out the ‘who’ 🤔 First and foremost, dig every possible information about the client:

  • Who is the client (its vision, mission, and goals)?
  • What does it produce?
  • What are its key markets and target customers?
  • What are its business growth plans?
  • Which markets is it presently serving?
  • Also, figure out the kingpins of a proposal approval process. This will help you to create a comprehensive proposal with all the necessary answers expected by the decision-makers.

Understand the challenges 🤗 Find what’s bothering them and what is causing hindrance to their business success. Learn about their existing solution and its challenges.

Stitch the glitch and offer the best solution 🤩 After a thorough review of all the points mentioned above, find the best solution to your prospective client’s problems.

List down key differentiators 👌 This will help you to beat the competition in the dust. It draws a comparison chart and puts you in a superior position.

According to Gray Mackenzie, founder of GuavaBox ,

“Prior to submitting a proposal, make sure you have clearly defined all the major points verbally with the potential customer. By discussing the scope, cost, timeline, and details prior to submitting a written proposal, you can uncover objections earlier in the process.” – Gray Mackenzie, 10 Sales Experts Share Their Best Business Proposal Tips

How to write a business proposal

Let’s get down to the fundamental elements that form a business proposal. Learn how to create a business proposal that stands out and close sales.

Title page/Cover page 🖼 The name says it all.

Pretty easy-peasy thing to understand, right? After all, you have been creating the title pages since school days.

Still, make a note: Always write a gripping title that intrigues prospective clients’ interest and urges them to read on.

Other components that should be included on the title page are:

  • Your company name and logo;
  • Prospective customer’s name;
  • Submission date.

Table of contents (TOC) 📝 As the name suggests, a TOC is a well-structured layout of the document. It helps to skim and scan and navigate speedily through different sections of a business proposal.

Executive summary 🗒 It sets the tone for a proposal and makes the reader inquisitive about reading subsequent sections. It sums up the entire business proposal – the purpose of sharing the proposal and why and how your solution is the right fit for the prospective client. Leave no stone unturned to boast about your offerings in the executive summary.

Details of offerings 🎁 This is an in-depth description of the products or services your company has to offer.

How will the offerings solve the client’s problems? 💡 This explains why your products/services are the right fit to address a prospective client’s needs and why it is a better alternative than the competition.

The methodology/implementation of offerings 🛠 This section is a blanket explanation of how the promised deliverables will be executed. It provides step-by-step clarity on each action along with timelines. It gives the client peace of mind and builds trust and confidence in the offering.

Pricing, payment, and legal matters 💵 Here, you talk about the pricing structure, applicable taxes, payment schedule, cancellation policy, and how you plan to solve the legal matters (if any arise in the future).

Here are some tips for this section:

  • Ensure that the pricing details are concise and complete.
  • Providing a comparison chart with different pricing options helps to make decisions faster.
  • Don’t go overboard with pricing, and also, don’t underrate yourself.
  • Always refer to the RFP and verify if every request has been fulfilled.
  • Separate out and create a new legal section if your business demands an extensive list of legal requirements.

Details about your company 🔍 This is an exhaustive overview of your company. Don’t forget to add relevant customer testimonials, case studies, or success stories to build your case among prospective customers.

Signatures and Call to action 🖌 This is the moment that gets butterflies in your stomach; the closure. This is the concluding part of a business proposal. Here (if all your prayers get answered), you and your client sign the proposal and secure the deal. Hurray!

Pro tip: Once you send the business proposal, don’t sit idle in your cocoon day-dreaming of winning the proposal. Always proactively do follow-ups with the prospective clients and clarify their doubts.

For start-ups or small businesses, drafting a business proposal can be an unnerving experience. They work fingers to the bone to write a perfect business proposal. Spending too much time on it might lead to missing the deadline and eventually losing out on a golden opportunity.

According to a report by Better Proposal , sending a business proposal within 24 hours increases the likelihood of winning the deal by 25%. 🤝

Here’s the secret sauce to speedily create flawless business proposals :

First, pick a professionally vetted and ready-to-use business proposal template and draft a business proposal like a cakewalk. Such as the Business Proposal Template included below.

Next, always use Process Street ‘s super-powered business proposal template checklist and ensure no step gets missed in the process.

Business Proposal Template Checklist

It even turns out a blessing for big businesses since they have to draft multiple proposals all the time. Templates and checklists save a lot of time, enhance productivity, and increase the chances of success.

Types of business proposals

Majorly, there are two types of business proposals:

Solicited business proposal 👋 Also known as an invited business proposal, it comes into play when a buyer, or a company, outlines its requirements and requests suppliers to present an offer. It can be a response to a public tender issued by big corporations or government agencies.

Alternatively, a solicited business proposal can also be submitted as a response to the RFP shared by a prospective client.

The difference between the two is that while the earlier one is open to all bidders, the latter’s scope is limited as it is shared with shortlisted suppliers.

Pro tip: Do a thorough check before submitting an invited business proposal. Missing out on-minute details can kick you out from their consideration list.

Unsolicited business proposal 🚪 An uninvited or unsolicited business proposal is a proactive attempt to create a business opportunity. This proposal is sent to prospective clients without being asked.

The good news is, there are slim chances of your rival sending a business proposal simultaneously, so less or no competition.

The bad news is, it might breathe in the customer’s inbox for a few days and then, without being read, depart to the heavenly abode -the trash folder.

But still, like a cold call, it leaves some impression on prospective clients and shoots up the chances to cut a deal in the long run.

Pro tip: An unsolicited business proposal is mostly sent through emails. Make certain to write an attention-grabbing headline and a convincing explanation to draw attention.

Here’s a comparison chart that distinguishes between business plan and business proposal:

business plan vs business proposal tips

Bonus: How to make ‘wow’ business plans and business proposals

Here are the secret ingredients to make awesome and captivating business plans and proposals:

business plan vs product

Follow the principle of KISS (Keep it simple, silly) 😛

This is not the right place to brag about your vocabulary skills. You want the prospective customer to focus on reading rather than wasting time looking up for a word.

Always remember! Communication is the key.

So, go simple and ditch those heavy jargons.

Go visual 📷

Don’t wear-out the pupils of your prospects with long-winded documents. Capitalize on the multisensorial abilities of humans as well.

Visuals increase people’s desire to read content by 80%.

Leverage the power of visuals and make your document easily graspable by adding graphs, infographics, flowcharts, tables, images, and videos.

Add social proof 👌

Do not forget to add positive feedback or customer testimonials. If similar projects have been delivered in the past, do add relevant links and case studies of that work. It helps to build trust and strengthen your case.

“Make sure you have great success stories that you can share with potential clients. At the end of the day, most, if not all, potential clients want to know you will provide value to them and generate positive ROI.” – Mathew Bivens, Podcast and marketing consultant,  10 Sales Experts Share Their Best Business Proposal Tips

Proofread 👁️

Ensure the document is free from grammar and spelling errors.

Follow brand guidelines 📖

Your document should reflect your brand. Bring consistency in all your documents and design them as per the brand guidelines.

Use document builder tools 🛠️

Time is money!

The likelihood of getting a ‘yes’ on your business plans and business proposals depends on how fast you can create a flawless document.

Empower your organization with a smart and all-in-one document builder tool like Revv – create, communicate, collaborate, and close your documents in no time.

Business plans and business proposals are two different worlds with distinct purposes and goals. But, both play a prime role in increasing the odds of business success.

People often get the wrong end of the stick and ask for a business plan when they mean business proposal or vice-versa.

But, we don’t need to worry about that since we are now clear on what is what.

Cheers to us! 🍻

P.S: Don’t forget to subscribe to the Process Street blog to get notified of our upcoming articles. We also have a podcast “Tech Out Loud” featuring content written by respected industry leaders such as Peep Laja , Sujan Patel , Tomasz Tunguz , and more! 🚀

What is your take on business plans and business proposals? Have you ever got your wires crossed with these two terminologies? Don’t forget to post your comments below. 👇

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Molly Stovold

Hey, I'm Molly, Junior Content Writer at Process Street with a First-Class Honors Degree in Development Studies & Spanish. I love writing so much that I also have my own blog where I write about everything that interests me; from traveling solo to mindful living. Check it out at mollystovold.com .

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Can you please help with a business plan on farming

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What is a Business Plan? Definition and Resources

Clipboard with paper, calculator, compass, and other similar tools laid out on a table. Represents the basics of what is a business plan.

9 min. read

Updated November 30, 2023

If you’ve ever jotted down a business idea on a napkin with a few tasks you need to accomplish, you’ve written a business plan — or at least the very basic components of one.

The origin of formal business plans is murky. But they certainly go back centuries. And when you consider that 20% of new businesses fail in year 1 , and half fail within 5 years, the importance of thorough planning and research should be clear.

But just what is a business plan? And what’s required to move from a series of ideas to a formal plan? Here we’ll answer that question and explain why you need one to be a successful business owner.

  • What is a business plan?

Definition: Business plan is a description of a company's strategies, goals, and plans for achieving them.

A business plan lays out a strategic roadmap for any new or growing business.

Any entrepreneur with a great idea for a business needs to conduct market research , analyze their competitors , validate their idea by talking to potential customers, and define their unique value proposition .

The business plan captures that opportunity you see for your company: it describes your product or service and business model , and the target market you’ll serve. 

It also includes details on how you’ll execute your plan: how you’ll price and market your solution and your financial projections .

Reasons for writing a business plan

If you’re asking yourself, ‘Do I really need to write a business plan?’ consider this fact: 

Companies that commit to planning grow 30% faster than those that don’t.

Creating a business plan is crucial for businesses of any size or stage. 

If you plan to raise funds for your business through a traditional bank loan or SBA loan , none of them will want to move forward without seeing your business plan. Venture capital firms may or may not ask for one, but you’ll still need to do thorough planning to create a pitch that makes them want to invest.

But it’s more than just a means of getting your business funded . The plan is also your roadmap to identify and address potential risks. 

It’s not a one-time document. Your business plan is a living guide to ensure your business stays on course.

Related: 14 of the top reasons why you need a business plan

What’s your biggest business challenge right now?

What research shows about business plans.

Numerous studies have established that planning improves business performance:

  • 71% of fast-growing companies have business plans that include budgets, sales goals, and marketing and sales strategies.
  • Companies that clearly define their value proposition are more successful than those that can’t.
  • Companies or startups with a business plan are more likely to get funding than those without one.
  • Starting the business planning process before investing in marketing reduces the likelihood of business failure.

The planning process significantly impacts business growth for existing companies and startups alike.

Read More: Research-backed reasons why writing a business plan matters

When should you write a business plan?

No two business plans are alike. 

Yet there are similar questions for anyone considering writing a plan to answer. One basic but important question is when to start writing it.

A Harvard Business Review study found that the ideal time to write a business plan is between 6 and 12 months after deciding to start a business. 

But the reality can be more nuanced – it depends on the stage a business is in, or the type of business plan being written.

Ideal times to write a business plan include:

  • When you have an idea for a business
  • When you’re starting a business
  • When you’re preparing to buy (or sell)
  • When you’re trying to get funding
  • When business conditions change
  • When you’re growing or scaling your business

Read More: The best times to write or update your business plan

How often should you update your business plan?

As is often the case, how often a business plan should be updated depends on your circumstances.

A business plan isn’t a homework assignment to complete and forget about. At the same time, no one wants to get so bogged down in the details that they lose sight of day-to-day goals. 

But it should cover new opportunities and threats that a business owner surfaces, and incorporate feedback they get from customers. So it can’t be a static document.

For an entrepreneur at the ideation stage, writing and checking back on their business plan will help them determine if they can turn that idea into a profitable business .

And for owners of up-and-running businesses, updating the plan (or rewriting it) will help them respond to market shifts they wouldn’t be prepared for otherwise. 

It also lets them compare their forecasts and budgets to actual financial results. This invaluable process surfaces where a business might be out-performing expectations and where weak performance may require a prompt strategy change. 

The planning process is what uncovers those insights.

  • How long should your business plan be?

Thinking about a business plan strictly in terms of page length can risk overlooking more important factors, like the level of detail or clarity in the plan. 

Not all of the plan consists of writing – there are also financial tables, graphs, and product illustrations to include.

But there are a few general rules to consider about a plan’s length:

  • Your business plan shouldn’t take more than 15 minutes to skim.
  • Business plans for internal use (not for a bank loan or outside investment) can be as short as 5 to 10 pages.

A good practice is to write your business plan to match the expectations of your audience. 

If you’re walking into a bank looking for a loan, your plan should match the formal, professional style that a loan officer would expect . But if you’re writing it for stakeholders on your own team—shorter and less formal (even just a few pages) could be the better way to go.

The length of your plan may also depend on the stage your business is in. 

For instance, a startup plan won’t have nearly as much financial information to include as a plan written for an established company will.

Read More: How long should your business plan be?  

What information is included in a business plan?

The contents of a plan business plan will vary depending on the industry the business is in. 

After all, someone opening a new restaurant will have different customers, inventory needs, and marketing tactics to consider than someone bringing a new medical device to the market. 

But there are some common elements that most business plans include:

  • Executive summary: An overview of the business operation, strategy, and goals. The executive summary should be written last, despite being the first thing anyone will read.
  • Products and services: A description of the solution that a business is bringing to the market, emphasizing how it solves the problem customers are facing.
  • Market analysis: An examination of the demographic and psychographic attributes of likely customers, resulting in the profile of an ideal customer for the business.
  • Competitive analysis: Documenting the competitors a business will face in the market, and their strengths and weaknesses relative to those competitors.
  • Marketing and sales plan: Summarizing a business’s tactics to position their product or service favorably in the market, attract customers, and generate revenue.
  • Operational plan: Detailing the requirements to run the business day-to-day, including staffing, equipment, inventory, and facility needs.
  • Organization and management structure: A listing of the departments and position breakdown of the business, as well as descriptions of the backgrounds and qualifications of the leadership team.
  • Key milestones: Laying out the key dates that a business is projected to reach certain milestones , such as revenue, break-even, or customer acquisition goals.
  • Financial plan: Balance sheets, cash flow forecast , and sales and expense forecasts with forward-looking financial projections, listing assumptions and potential risks that could affect the accuracy of the plan.
  • Appendix: All of the supporting information that doesn’t fit into specific sections of the business plan, such as data and charts.

Read More: Use this business plan outline to organize your plan

  • Different types of business plans

A business plan isn’t a one-size-fits-all document. There are numerous ways to create an effective business plan that fits entrepreneurs’ or established business owners’ needs. 

Here are a few of the most common types of business plans for small businesses:

  • One-page plan : Outlining all of the most important information about a business into an adaptable one-page plan.
  • Growth plan : An ongoing business management plan that ensures business tactics and strategies are aligned as a business scales up.
  • Internal plan : A shorter version of a full business plan to be shared with internal stakeholders – ideal for established companies considering strategic shifts.

Business plan vs. operational plan vs. strategic plan

  • What questions are you trying to answer? 
  • Are you trying to lay out a plan for the actual running of your business?
  • Is your focus on how you will meet short or long-term goals? 

Since your objective will ultimately inform your plan, you need to know what you’re trying to accomplish before you start writing.

While a business plan provides the foundation for a business, other types of plans support this guiding document.

An operational plan sets short-term goals for the business by laying out where it plans to focus energy and investments and when it plans to hit key milestones.

Then there is the strategic plan , which examines longer-range opportunities for the business, and how to meet those larger goals over time.

Read More: How to use a business plan for strategic development and operations

  • Business plan vs. business model

If a business plan describes the tactics an entrepreneur will use to succeed in the market, then the business model represents how they will make money. 

The difference may seem subtle, but it’s important. 

Think of a business plan as the roadmap for how to exploit market opportunities and reach a state of sustainable growth. By contrast, the business model lays out how a business will operate and what it will look like once it has reached that growth phase.

Learn More: The differences between a business model and business plan

  • Moving from idea to business plan

Now that you understand what a business plan is, the next step is to start writing your business plan . 

If you’re stuck, start with a one-page business plan and check out our collection of over 550 business plan examples for inspiration. They’re broken out over dozens of industries—you can even copy and paste sections into your plan and rewrite them with information specific to your business.

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See why 1.2 million entrepreneurs have written their business plans with LivePlan

Content Author: Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

business plan vs product

Table of Contents

  • Reasons to write a business plan
  • Business planning research
  • When to write a business plan
  • When to update a business plan
  • Information to include
  • Business vs. operational vs. strategic plans

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The Ultimate Guide to Product Strategy

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What is a Product Strategy?

How to craft your product strategy.

  • What's the product leader’s role in product strategy?

How to tie product metrics to a product strategy?

  • How to align the roadmap under the product strategy?

How to stay accountable with your product strategy

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A product strategy is a high-level plan that defines your product goals throughout its life cycle and how it will support the organization’s goals.  The product strategy will also answer who the product will serve and how it will benefit them. These plans are then brought to life on the roadmap.

There’s no single blueprint for a product strategy, but the good ones have a handful of things in common.

1. They have a purpose. Building a product just for the sake of creating and maintaining something isn’t a strategy; that’s busywork. Products should have a raison d‘être and exist for something beyond themselves. Figuring out what that is and getting the entire organization to buy into that is step one.

2. Understand customer needs and how they’re evolving. All products need customers, so any product strategy should be based on meeting their requirements. Since customers don’t always know exactly what they want, the product strategy must bridge the gap between what customers say and what they need. Just as importantly, customer needs aren’t static. They change over time, and the product must adapt to match.

3. Understand your value chain and how it’s evolving. Products don’t exist in a vacuum. Neither do its users. The product strategy must incorporate how it fits into the larger ecosystem, determining where it adds value and where friction points remain. As that ecosystem changes, the product’s role within it may also evolve.

4. Determine what change is likely to happen. Although strategic thinkers don’t possess psychic powers, they should cast an eye toward the future and anticipate likely disruptive forces that limit or expand the product’s opportunities for growth and usage.

5. Define actions against those changes. With a view on the horizon, what must be included in the product strategy to mitigate those disruptions or seize upcoming opportunities?

Download The Product Strategy Playbook ➜

The Power of Product Strategy

Your product strategy is the key to connecting business objectives with the product. Companies have many different types of strategies, all built on one another to align the team properly. Making a great product strategy requires understanding where it sits in the middle of the high-level corporate vision and roadmap initiatives.

product strategy pyramid

Starting from the top, most companies create a corporate vision. It is the entire outfit’s reason for being. In a company’s early stages, the company and the product may be viewed synonymously. But that should rapidly change as the product rolls out and the business becomes more complex and diversified.

A corporate vision is the highest-level view of what the company wants to be. LinkedIn wants to “create economic opportunity for every member of the global workforce.” IKEA’s vision “is to create a better everyday life for many people.” Nike wants to “bring inspiration and innovation to every athlete* in the world. (*If you have a body, you are an athlete.)”

These visions are fuzzy on the details and big on inspiration. They intend to motivate employees, excite consumers, and boil down their philosophy into an extremely brief sentence or two.

A product vision statement is a static, aspirational statement about what the product aims to achieve. It’s who we are today and where we want to be.

Product visions are short and sweet. They don’t need ongoing updates because they’re also (relatively) timeless. Google wants “to organize the world’s information and make it universally accessible and useful.”

Just beneath the corporate vision is the company mission. Now we start getting into tactics, albeit at an extremely high level. The mission talks about how the company will make that vision a reality.

These aren’t exactly actionable business plans, but they at least give some sense of how a vision might be realized. From a mission statement, you can then create a strategy, and that is where the product comes into play.

Product missions are also extremely brief. Think StubHub’s “Where fans buy and sell tickets.” Everyone reading it understands the big idea behind the product, but it isn’t limiting how to fulfill that mission.

Missions spell out the product’s overall purpose and what you want to do with your team. It can come before in-depth customer research and persona development , as it’s still not specifying implementation.

With a defined product vision and mission, a product strategy can then take shape. The product strategy is the art of finding and exploiting leverage in the competitive landscape to achieve your purpose (as defined in the product vision/mission).

Ambition is not a strategy; it must be more tactical. Strategies need a sense of realism, representing accomplishable outcomes.

However, product strategies also seldom include numbers or metrics because those make it too specific. Being No. 1 isn’t a strategy, either. That’s fodder for a mission or vision.

In the webinar below, we discuss how to treat your strategy as a product.

Product plans or initiatives

Residing one level below a strategy are plans for the product. Far more granular and specific, these are where the rubber meets the road, resources get allocated, budgets are defined, and schedules set. Project plans are all about actual execution, with no wiggle room for intent and targets.

With this hierarchy now defined, it’s time to get into what this means for products.

Product strategies aren’t easy to create… if they were, every entrepreneur would be a smashing success, and all startups would turn into unicorns. But following a simple playbook ensures you haven’t forgotten anything.

Here are five steps to a winning product strategy :

Create a Product Strategy in 5 Steps

Factor in the rest of the field

Just like a product manager shouldn’t devise an entire product strategy all by themselves, a product strategy can’t ignore what else is out there. Rare is the case where a product doesn’t face direct competitors or viable alternatives for the services and functions it provides.

Conducting a competitive analysis takes a disciplined approach to evaluating the other players vying for potential customers. This exercise should cast a wide net in terms of what solutions prospects are using or considering.

Each alternative’s attributes must be assessed, along with which features and capabilities resonate with the target market. Not every checkbox on the feature matrix matters the same to actual buyers and users, as organizations want to avoid becoming feature factories in their quest to “catch up.”

feature factory

Pricing strategies must also take competitors into account. The product strategy may entail a premium price point or undercutting the competition, but it’s hard to come up with a price tag without knowing what the rest of the market charges.

Additionally, product managers shouldn’t be fooled or talked out of playing a role in the pricing strategy. Despite what sales or business development might say, product management has the best understanding of a product’s COGS (cost of goods sold), and its real value to different customers.

Instead, product management should play an active part in the product’s pricing strategy , collaborating with other parts of the business to devise a model that drives growth and hits the company’s revenue and profitability goals.

Read the Power of SaaS Pricing Experiments ➜

From a product’s conception until its final sunset, product management’s role must adapt to the different lifecycle stages . Strategy never goes away, but it does have two distinct phases.

Product management throughout the product lifecycle

There is the initial strategy development, which begins with ideation. The strategy goes through rapid evolutions as research rolls in, MVPs are designed and built, feedback is collected, and the product morphs and changes while trying to find product-market fit.

Download the Product-Market Fit Book ➜

Product managers spend far more of their time developing and refining the strategy during this stage than at any other time. There is just so much learning occurring and unknown variables to define.

Once the product gets traction, product managers take on a different set of responsibilities. Attention shifts to growth and retention, usually followed by managing a decline or reinvention. Here the product strategy itself shouldn’t see as many significant shifts, although there’s never a time when the topic isn’t part of a product manager’s portfolio.

Staffing up

These lifecycle stages also influence the makeup of the product team itself. Different phases require varying skills, not to mention the volume of work to be done. With this in mind, product management must take a strategic approach to staffing.

Hiring product managers isn’t as straightforward as some other disciplines. There’s no ideal resume or degree for product management, and the role requires a unique combination of soft skills, creativity, and technical acumen.

Because these demands differ throughout the product lifecycle, product managers must carefully consider when is the right time to scale their team . The ideal team size is also highly dependent on the complexity of the products, the number of products in the overall portfolio, and which areas deserve more dedicated attention.

Download From Product Manager to Product Leader ➜

Collaborating with other teams

Despite building out a product team, product strategy meetings must involve other parts of the organization. No matter how many great ideas and talented individuals comprise the product management ranks, input from other departments is crucial.

Keeping these product strategy meetings from going off the rails is yet another challenge product managers face. Everyone brings their biases, pet projects, favorite shiny objects, and anecdotal evidence to the table.

Download IMPACT ➜

While a viable product strategy must encompass more than a series of measurable targets, metrics play a vital role in defining and executing the product strategy.

Product managers don’t have to reinvent the wheel when it comes to defining product metrics. There’s an existing set of well-understood and valuable metrics at their disposal, assuming the instrumentation and reporting are in place. The fun/tricky part is deciding which ones to concentrate on .

The product’s maturity will also dictate which metrics are most relevant to that phase of the product strategy. Once a product is getting used and the analytics are rolling in, product managers can use metrics to adjust and enhance the product strategy . The data provides a valuable feedback loop and can quantify the anecdotal observations.

SaaS Metrics Pyramid Example

The product roadmap is the primary vehicle for transforming product strategy from theory to reality. It lays out how the product will evolve to achieve its key goals and communicate to everyone the priorities.

But translating a strategy and aligning the roadmap underneath it isn’t a trivial undertaking. It requires a lot of work in advance to identify what matters most to key organizational stakeholders and extensive planning and prioritization .

Download the Product Manager's Guide to Prioritization  ➜

One of the biggest mistakes product managers can make in this area is thinking they can—or should—do it alone. Failing to conduct critical strategic conversations ahead of time can spell doom for a product roadmap and tarnish product management’s reputation.

Incorporate stakeholder concerns into the process and product managers shouldn’t assume they know what each person cares about until they’ve discussed it personally with everyone. Not only is this a fact-finding opportunity for the roadmap makers, but it also provides another opportunity to reinforce the details of the product strategy with those stakeholders.

Building the roadmap

Much like a product strategy can only come after its vision and mission have been defined, it’s also logical to adopt a top-down strategy for the roadmap itself. This process intrinsically links everything in the roadmap to the high-level goals the organization established for the product. The strategy becomes a common, universal thread running through everything on the roadmap.

Strategy-based roadmapping also makes for a better team experience. It clears up any “why” questions and uncertainties. It allows the team to focus on what will have the most significant impact on executing the strategy everyone’s on board with.

Download Your Free Guide to Product Roadmaps ➜

Playing the numbers game.

One method is letting the numbers call the shots. In this case, that means adopting a data-driven approach to roadmapping by prioritizing projects that improve specific key metrics.

Data-driven product roadmaps embrace this quantifiable attitude by basing every decision on how it will influence particular measures of success. This tactic is great for building consensus since it’s hard to argue with data. But the “art” of a data-driven product roadmap is figuring out which metrics matter with regards to the product strategy .

Narrowing the field down to just a handful of measures of progress and success keeps the organization focused. Without a select few metrics—or a single North Star metric —to guide the way, the picture can get cloudy.

Vanity metrics can obscure the numbers that matter, as can metrics that were once critical but are now less relevant and meaningful. And if the obsession with specific measures goes too far, decision-making can ignore the customer experience itself, not to mention product managers’ sanity and happiness.

Results While a data-driven roadmap intends to move the needle on KPIs, sometimes the desired results are a little less measurable. Here’s where outcome-riven roadmapping can play a rol

Results-oriented roadmapping

Instead of saying the goal is improving a specific KPI, these product roadmaps value what will be possible after each initiative is complete. It gets out of the feature-specific mindset, leaving the implementation details intentionally fuzzy as the focus shifts toward the result. It could be anything from saving customers time when completing a task to unlocking an entirely new market for the product by adding additional functionality.

Outcome-driven roadmaps don’t ignore metrics, but they continually reevaluate which measurements are most important to track success against specific objectives. Outcomes determine the KPIs, not the other way around.

Forgoing features for themes

Product roadmaps have long been synonymous with features and delivery dates. Here’s what we’re building. Here’s when it will be ready. Things were sometimes grouped, but in general, it’s typically just a laundry list of what’s next on the docket.

But product roadmaps can and should be so much more than high-level project plans. A product roadmap is a unifying artifact that can get an entire organization excited about how the product vision and mission will unfurl. But the more specific a product roadmap gets, the less useful it becomes.

Instead of telling a story, it spells out a schedule. And that schedule is full of things for people to question, debate, and complain about. Plus, they’re outdated almost as soon as they’re exported, causing additional drama when false expectations are set and not met.

Moving to feature-less roadmaps spares everyone in the organization from drowning in details and nitpicking over dates and specifics. By basing product roadmaps on themes , the focus stays on strategy, goals, and outcomes. It’s far easier to align stakeholders and keep coworkers motivated and excited about the future this way than with a chronological litany of enhancements.

Theme-based roadmaps also require fewer updates and revisions. Since they’re less granular by definition, minor adjustments to dates and specific implementation details don’t warrant a modification.

Doownload Feature-less Roadmaps: Unlock Your Product's Strategic Potential➜

A product strategy’s viability and performance reflect directly back on product management and its credibility . If it seems out-of-step with reality or isn’t delivering results, the blame and finger-pointing will always land on product managers.

With this in mind, product managers should be fully confident in their product strategy. If there’s anything shaky in its foundation, they have to immediately investigate and mitigate any shortcomings, errors, or oversights.

Inherited product strategies

Not everyone is there from Day One, so some product teams find themselves managing products where someone else created the initial strategy. However, this doesn’t mean it should be scrapped, and everyone should start from scratch.

The team should unpack for themselves, ensuring any misunderstandings aren’t personal. The current strategy’s meaning to stakeholders should be determined, as historical drivers and beliefs fuel it.

Most importantly, revisit the assumptions used to craft the existing strategy, challenging them when appropriate. Markets evolve, new research uncovers additional things, and the current strategy’s underlying basis may no longer be valid.

Avoid stale strategies

Product strategies should be revisited regularly (monthly or quarterly is a good cadence). Start with the assumptions and then bounce alternatives and new things against them. If the strategy stands up to this scrutiny, it’s still in good shape. If not, it’s probably time for a refresh.

Frequent strategy revisions and mid-course, minor corrections are more accessible than making a full-scale change after not revisiting it for a while. Persistent reevaluation also protects product management’s trust and reputation as the strategy isn’t drastically changing all the time.

It’s also prudent to revisit user personas. As usage grows, it may turn out the people using the product may not exactly match the initial crop of personas used in earlier strategy development. Plus, there may be entirely new markets finding value in the product that wasn’t part of the original plan.

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business plan vs product

How to describe your product and service in a business plan like a pro

It’s deceiving.

You’d think that this part of a business plan does exactly what it says on the tin–describe your product & service offering– right ?

And yes, you are partially right. 

But there’s a very specific way in which this description should be written to make sure that your business has the best chance of succeeding – in real life and under the eagle eye of a potential backer (if you’re preparing a business plan for external financing purposes).

Keep reading to find out the secret sauce to writing a winning product and service description:

WHAT is the Product and Service Description in a Business Plan?

This business plan section is also known as:

  • Product and/or Service Overview

HOW Do You Write a Product and Service Description in a Business Plan?

So, what should a good product/service overview contain?

Here are some items to consider including into this section:

1.     Portfolio:

The range of products and/or services that a business offers to potential and current customers.

2.     Features and benefits (value proposition):

Explain what the product/service does and how it works.

3.     Problem and solution (value proposition cont.):

The problem(s) the product or service solves. Every business needs to solve a problem that its customers face. Explain what the problem is and how the product or service solves it.

4.     Innovation:

If the company is doing something new and different, explain why the world needs the innovation.

5.     Proprietary advantages:

Any proprietary features that contribute to a competitive advantage. This could include: intellectual property (e.g., copyright, trademark, patent filings, trade secret), exclusive agreements with suppliers or vendors, exclusive licenses (e.g., for a product, service or technology), company’s own research and development activities.

6.     Development stage:

Current stage of development of the product / service (e.g., idea, development, testing, prototype, already on the market).

7.     Product life-cycle:

Estimate the life span of the product or service.

Specify whether the product or service under consideration is a short-lived fad or has a long-term potential.

8.     Future:

Mention plans for changes and new additions to the current portfolio of products / services.

Describe any plans to move into new markets in the future (e.g., serving different types or sizes of customers, industries, geographic areas).

Make your best guess at when the business will be ready to address these markets and what it needs to do first to be ready.

9.     Limitations:

If applicable, explain any risks or limitations associated with the product (e.g., liability issues like guarantees or returns), along with any legal advice received regarding these issues.

10.  Visual aids:

Use photos, images, diagrams and other graphics to help the reader visualize and learn about the products / services.

If the business is tackling several distinct problems through different products / services, describe the solutions individually .

However, for a large line of products / services, there is no need to list each one, just identifying the general categories will suffice.

How LONG Is the Product and Service Chapter of a Business Plan?

This part of a business plan can be very short, just a couple of paragraphs, or it can spread over multiple pages, depending on how many products/services you offer and how much explanation they require.

If your products or services are particularly complex , technical , innovative , or proprietary , you will want to provide more information and spend considerable time describing them.

This is especially true if you are seeking funding for a new product or service, particularly one that is not immediately understandable to the business plan readers, and if potential funders are likely to be motivated by the specifics.

In any case, when describing a product or service, provide just enough information to paint a clear picture of what it is and does . A brief explanation of what you will be making, selling or doing is appropriate here.

Excessive detail makes this section cumbersome for a reader to wade through. Reserve detailed descriptions (e.g., production processes) for the Appendix.

In any case, it is a good idea to first summarize the value proposition of each product or service into a one short sentence, and only then continue with a more detailed description of the product or service.

If any images or graphics are available that would contribute to the understanding of the product or service, the writers of a business plan should use them.

Otherwise, include any product or service details , such as technical specifications, drawings, photos, patent documents and other support information, in the Appendix section of the business plan document.

TOP 4 TIPS for Writing a Product and Service Overview

Tip #1: features v. benefits.

Don’t just list the features of the product / service.

Instead, describe the specific benefits it will offer to customers – from their perspective.

Make it clear what your customers will gain through buying your product or service. Include information about the specific benefits of your product or service – from your customers’ perspective.

Features are not the same thing as benefits. And you need to understand both.

Confused? Let’s clarify:

What Is the Difference Between Features and Benefits?

Tip #2: problem v. solution.

If at all possible, present the information in the Problem >> Solution format.

Start by describing the key problem that your customers have, immediately followed by the solution with which you will address this need for your target market.

Tip #3: Competitive Advantage

You should also comment on your ability to meet consumers’ key problems or unmet needs in a way that brings your product or service advantages over the competition.

For example:

  • If you have a common business, such as a restaurant:

Explain why your customers need your particular restaurant. Do you offer lower prices? More convenient hours? A better location? A different concept, such as a vegan ice-cream pop up store? A specialty that is not otherwise available in your area, such as a Peruvian ceviche or Hungarian goulash?

  • If your company is doing something new and innovative :

What is it about the existing solutions that is subpar? Maybe you are improving on a mediocre product category, such as creating better medical uniforms for healthcare workers (e.g., more flattering cut, trendy designs, sustainable materials). Or perhaps your new blockchain solution has the potential to entirely eliminate the middle-men in an entire industry.

Although the subject of competitive advantage regarding the business as a whole will be fully explored in the Market and Competitor Analysis part of a business plan, it is advisable to touch on it here also – in the context of the company’s products and service.

Tip #4: Validating the Problem and Solution

Speaking of which, when you are doing market research and analysis for your business plan, remember to validate the problem and solution your product or service is addressing.

There is a plethora of minor issues out there that people are perfectly fine with just tolerating. To build a solid business, though, you need a problem that a sufficient number of people are motivated to solve. That is, that they recognize it as a problem that’s worth paying you to solve. Even if they didn’t realize it was solvable until they were presented with your solution.

So, how do you get evidence that prospects are willing to pay for your solution?

Validation of Problem

Describe what you’ve done so far to confirm that the problem you are focused on is a real problem for your customers.

  • Existing Business:

For an established business, this is probably just a matter of recapping your success in the marketplace. Your customers have already voted with their wallets.

  • New Business:

For a startup, it is important to survey and have conversations with as many potential customers as possible about where they are having problems, how they solve them today, and validate that they are interested enough in addressing those problems to pay for a good solution.

Validation of Solution

Describe how you have tested your ideas with existing or potential customers to confirm that there is a good market for the products or services you plan to offer. Summarize the positive customer feedback or market traction that you have achieved with your solution so far.

For an established business, the answers probably lie in your paying customer base – their existence itself, combined with their repeat business, word-of-mouth referrals, follow-up customer surveys, and other indicators of customer satisfaction.

For a new business, you can start validating your solution immediately by trying it out with potential customers, even informally or at no charge, to get their opinion. If your product or service does not exist yet, talk to prospects about what you plan to offer and measure their feedback.

In summary, this section should answer the million dollar question:

What makes you think that people will buy, be satisfied with, and recommend your products or services?

Related Questions

What are products and services.

Products and services are items that businesses offer for sale to a market. While services are intangible, meaning that they do not exist in a physical form, products are of tangible nature, in other words – you can touch them.

What is a Product Line?

Product line is a group of related products that are all produced or sold by one entity and typically marketed under one brand name.

What is a Service Line?

Service line is a group of related services that are all produced or sold by one entity and typically marketed under one brand name.

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Business Plan vs. Business Proposal

business proposal vs. business plan

The terms “business plan” and “business proposal” are sometimes used interchangeably, however, they are very different. The main difference between a business plan and a business proposal is that a business plan documents your growth strategy while a business proposal is a specific ask for someone to take an action you desire (e.g., buy your product/service, invest in your company, partner with you, etc.).

In this article, we will define a business plan and a business proposal and give you examples of when each is appropriate for you to use.  

What is a Business Plan?

professional business plan

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Business Plan Structure

Typically, the business plan structure contains the following 10 components:

  • Executive Summary
  • Business Description & Overview
  • Market Research & Analysis
  • Customer Analysis
  • Competitive Analysis
  • Marketing Strategy & Plan
  • Operations Plan
  • Management Team
  • Financial Projections & Plan

It is recommended that a business plan is updated annually to adjust for changes in the industry trends and the business itself.  

What is a Business Proposal?

business proposals

In terms of what you are asking from them, it can be anything that involves funds and time on their end including cash investment, product development assistance, and even employees if they have applicable skill sets.  

Business Proposal Structure

An invited business proposal is written in response to an RFP. A request for proposal (RFP) is a document that invites potential suppliers to submit business proposals. How to write a business proposal depends on the format requested and the questions included in the RFP.

The following are the components that usually make up a business proposal:

  • Brief description of your company’s services/products as the proposed solution to the goals of the RFP
  • Reiteration of the scope of the particular project
  • Responses to questions asked in the RFP
  • Cost of the project, including drafting services, materials, tools, labor, delivery and other expenses

An unsolicited business proposal is essentially the same format, but it will solicit the client’s business while anticipating the clients’ concerns and issues. A business proposal is more of a marketing document than an offer because it attempts to persuade the potential client to do business by demonstrating your value proposition and a call to action.  

So, What’s the Difference Between a Business Proposal vs. a Business Plan?

In a business proposal, company representatives typically work with the customer to tailor a business proposition that is attractive to both parties. This usually comes in the form of a written document detailing the services and cost associated with fulfilling an offer or request but can also include electronic contracts.

In contrast, a business plan is a description of your company on the executive and operational levels aimed at investors for raising financial support or other stakeholders in order to facilitate long-term growth. For example, an investor will want to know about how different departments within your business interact with one another, while somebody who will be implementing your product probably only needs more limited information such as design specs because they are not going into production themselves.

A business proposal may provide you with more details of the project, but it does not include information about your company’s operations or future plans.  

Examples of Business Plans vs. Business Proposals

  • When you give a potential investor your business plan which includes all sorts of information about how we will achieve your goals together as well as the amount of money it’s going to take. The business proposal is for them to write you a check in return for interest/principal payments or a percentage of your company.
  • You might be getting partners involved in your business who will help with product development and distribution. You are offering them a business proposal to work together. However, they may request to see your business plan to better understand your goals, potential profitability, and how you plan to reach these goals before deciding to work with you.
  • Your existing business has been so successful that you decide to outsource the social media marketing efforts to a freelancer to free up more of your time. The freelancer would provide a business proposal stating their terms and conditions along with the agreed-upon pay arrangement for their services. This change in organizational structure may be noted in your business plan to demonstrate expansion and financial stability to continue growth.
  • In your business plan , one of your goals is to grow your client base by 5% each month. You identify potential clients in need of your services or products and send an unsolicited business proposal to demonstrate how your products or services can benefit them in order to develop a new prospective client list.

The business plan is a roadmap for your company’s present and future, while the business proposal has to do with what you are asking someone else for money.  Applying this difference into practice can be difficult at times because business plans are often marketed as business proposals. However, it is important to be able to identify the difference between a business plan and business proposal in order to maximize their effectiveness and importance with potential investors or partners.

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What is a business roadmap and how to create one with examples

business plan vs product

If you’re working in the world of software development, then you’ve almost certainly heard of a product roadmap — the document that helps communicate the direction and progress of the product to internal teams and external stakeholders.

What Is A Business Roadmap And How To Create One

A product roadmap shows what high-level features will be delivered and roughly in what order and timeframe. It also facilitates communication with different groups about what is likely to happen and when without giving too much detail on how it’s being done.

This vision supports the organization in developing a product. Just as importantly, it ensures that all parties are aware of the product direction so they can adjust activities based on this summary of features.

However, although you might have seen a product roadmap , not every organization has a business roadmap. What is this document, what does it include, and how do you know if you even need a business roadmap?

What is a business roadmap?

As with a product roadmap, a business roadmap is designed to facilitate communication to various stakeholder groups on the direction of the business and plan of action to achieve business goals.

The business roadmap is a high-level visualization of objectives the organization hopes to achieve and in what order. It’s effectively a representation of the proverbial big picture.

A business roadmap should give the organization and everyone in it a general outline of short- to medium-term business goals. This allows relevant stakeholders to make appropriate business decisions that support the delivery of items in the roadmap .

Business plan vs. business roadmap

I know what you’re thinking: isn’t a business roadmap just a business plan ? The short answer is no.

The fundamental difference between a business plan and a business roadmap boils down to the granularity of detail. A business roadmap is a much higher-level overview than a business plan, which is more precise and thorough.

For example:

  • A business roadmap might say that in Q1 of this year, we’re looking to expand the sales team in Europe
  • A business plan might say that in Q1 of this year, we plan to hire two people in France at a cost of $100,000, two people in Germany at a cost of $100,000, and a European sales manager at the cost of $100,000. These people will all need sales materials, phones, etc.

This variation in depth means that anyone looking at a business roadmap will know what the outcomes are going to be but not specifically how the business intends to get there. Someone reading a business plan should understand the individual steps the business plans to take along the journey.

Here’s an example of what a business plan looks like:

Business Roadmap Example

An example of a business roadmap

When you dive deeper into a business plan, you’ll also see that it covers aspects such as market analysis, sales and marketing plans , equipment requirements, and detailed financials. This provides a full, detailed view of how the business plans to operate over the short-to-medium term, which you can’t get from a business roadmap.

It’s more “We’ll have moved into a new office” rather than “We’ll be paying X for rent, and Y for new office equipment, and Z for the redirection of the post…”

How to create a business roadmap

When creating a business roadmap, it’s important to consider that, despite the relatively high level at which they present future activities, they do take a considerable amount of effort to produce.

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business plan vs product

As with any roadmap , there’s a need to understand inputs and priorities from across the organization and bring these together into one coherent vision. This means taking the following steps:

Develop business objectives

Identify business capabilities, identify business limitations, identify activities that facilitate the objectives, develop an outline roadmap.

Start at the beginning: what are you looking to achieve?

Your objectives should be self-contained, achievable goals that are clear for everyone across the organization to understand.

In the example business roadmap described above, the first line of the roadmap looks at the high-level primary objectives for the business — e.g., launching the business in new markets (Europe, the United States, and Canada) and moving the UK office.

From these objectives, the various functions across the business can determine their own individual milestones along the journey toward success.

Once you’ve established your objectives, the next step is to determine what is already in place to help you achieve them.

Ask yourself questions such as:

  • What exists within current structures that supports your goal?
  • Are there teams capable of achieving them?
  • Do they have the knowledge required to succeed?
  • Do they have enough funds?
  • What tools are available to use in pursuit of the objectives?

The other side of business capabilities is business limitations:

  • What doesn’t exist within the current organization that is needed to support your goals?
  • What key skills are your teams missing?
  • Where are new sources of financing required to move toward your objectives?

The final area to consider is what activities need to occur to achieve your objectives. For example:

  • What specific tasks must the team complete to drive user behavior?
  • What actions are requires to resolve or compensate for any limitations identified in the previous step?

Once this process is completed, activities designed to drive the business toward its objectives commence. It becomes necessary to group these tasks into some form of sequential order. That’s where the business roadmap comes in.

Let’s look at an example. If, in Q2, we’re planning to achieve X, which of our activities across our different business areas need to happen in Q1 and Q2 to reach that point? These are the building blocks of our business roadmap.

Each block represents an achievable milestone for that business area, clearly defining what they are looking to achieve at that point in time.

Common mistakes to avoid

If you’re new to business roadmaps, you’re bound to stumble here and there the first time you try to create one. It takes practice.

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However, some common mistakes businesses make include:

Not clearly defining business goals

Setting too many goals, setting unrealistic timelines, not getting business or customer validation.

Without a clear, overarching business vision, it’s impossible to dive down into the various business areas and set departmental milestones. An unclear objective leads to a muddying of activities and a lack of focus when moving forward.

It’s tempting to think you can get through huge amounts of work when looking at the long time periods considered in a business roadmap. However, because business goals are usually quite large in scale, the number of activities you can realistically achieve is relatively small.

Too many goals leads to frustration because your team will never be able to deliver on what they set out to achieve.

Unrealistic timelines make the invalid assumption that you can get through more activities than you think we can.

A roadmap is a high-level visualization of your milestones, but a roadmap entry is just the tip of the iceberg when it comes to the work required to deliver on those goals. Sometimes big things take time.

What’s the point of creating a roadmap if everyone isn’t onboard with it? There’s no value in creating a beautiful-looking roadmap if, as soon as you get into month one, someone holds up their hand and asks, “Why aren’t we doing X?”

An example business roadmap (template)

If we look at our example business roadmap as described above, one of the business objectives in Q3 is to launch our service in the US. This primary goal for the business will drive the business roadmap entries for our various business areas.

Sales needs to understand what our capabilities currently are in the US and what might restrict us from achieving this objective. Then, it must develop some departmental goals that help the business move toward its overall objectives. This will leave us with some roadmap entries such as:

  • Hiring a new sales team in Q2
  • Launching the service in Q3

Finance needs to understand the company formation and financial reporting rules within the US, as well as how the launch will be funded, which will lead to roadmap entries such as:

  • Form a US company
  • Secure US operational funding

Operations need to determine what we need to complete to support US recruitment and obtain an office, equipment, materials, etc. Roadmap entries directed at the operations team might include things like:

  • Hire a North American team
  • Source North American IT equipment

Business roadmap template

To access a full version of the business roadmap example described above, follow this link . If you’d like to use it as a template when creating your own business roadmap, click the link to download the file and, from the menu at the top of the spreadsheet, select File > Make a copy .

Screenshot From Business Roadmap Template

Start with your business roadmap

Although there is a considerable amount of effort that goes into creating a business roadmap, this document is essential in supporting the successful operation of a business.

The vision provided by a well-written roadmap gives focus and support to the entire organization and ensures that all areas of the business are driving toward the same destination.

At the end of the day, that’s what we want: a route to success.

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What is the difference between a business plan and a strategic plan.

It is not uncommon that the terms ‘strategic plan’ and ‘business plan’ get confused in the business world. While a strategic plan is a type of business plan, there are several important distinctions between the two types that are worth noting. Before beginning your strategic planning process or strategy implementation, look at the article below to learn the key difference between a business vs strategic plan and how each are important to your organization.

Definition of a business plan vs. a strategic plan

A strategic plan is essential for already established organizations looking for a way to manage and implement their strategic direction and future growth. Strategic planning is future-focused and serves as a roadmap to outline where the organization is going over the next 3-5 years (or more) and the steps it will take to get there.

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A strategic plan serves 6 functions for an organization that is striving to reach the next level of their growth:.

  • Defines the purpose of the organization.
  • Builds on an organization’s competitive advantages.
  • Communicates the strategy to the staff.
  • Prioritizes the financial needs of the organization.
  • Directs the team to move from plan to action.
  • Creates long-term sustainability and growth impact

Alternatively, a business plan is used by new businesses or organizations trying to get off the ground. The fundamentals of a business plan focus on setting the foundation for the business or organization. While it looks towards the future, the focus is set more on the immediate future (>1 year). Some of the functions of a business plan may overlap with a strategic plan. However, the focus and intentions diverge in a few key areas.

A business plan for new businesses, projects, or organizations serves these 5 functions:

  • Simplifies or explains the objectives and goals of your organization.
  • Coordinates human resource management and determines operational requirements.
  • Secures funding for your organization.
  • Evaluates potential business prospects.
  • Creates a framework for conceptualizing ideas.

In other words, a strategic plan is utilized to direct the momentum and growth of an established company or organization. In contrast, a business plan is meant to set the foundation of a newly (or not quite) developed company by setting up its operational teams, strategizing ways to enter a new market, and obtaining funding.

A strategic plan focuses on long-term growth and the organization’s impact on the market and its customers. Meanwhile, a business plan must focus more on the short-term, day-to-day operational functions. Often, new businesses don’t have the capacity or resources to create a strategic plan, though developing a business plan with strategy elements is never a bad idea.

Business and strategic plans ultimately differ in several key areas–timeframe, target audience, focus, resource allocation, nature, and scalability.

While both a strategic and business plan is forward-facing and focused on future success, a business plan is focused on the more immediate future. A business plan normally looks ahead no further than one year. A business plan is set up to measure success within a 3- to 12-month timeframe and determines what steps a business owner needs to take now to succeed.

A strategic plan generally covers the organizational plan over 3 to 5+ years. It is set with future expansion and development in mind and sets up roadmaps for how the organization will reach its desired future state.

Pro Tip: While a vision statement could benefit a business plan, it is essential to a strategic plan.

Target Audience

A strategic plan is for established companies, businesses, organizations, and owners serious about growing their organizations. A strategic plan communicates the organization’s direction to the staff and stakeholders. The strategic plan is communicated to the essential change makers in the organization who will have a hand in making the progress happen.

A business plan could be for new businesses and entrepreneurs who are start-ups. The target audience for the business plan could also be stakeholders, partners, or investors. However, a business plan generally presents the entrepreneur’s ideas to a bank. It is meant to get the necessary people onboard to obtain the funding needed for the project.

A strategic plan provides focus, direction, and action to move the organization from where they are now to where they want to go. A strategic plan may consist of several months of studies, analyses, and other processes to gauge an organization’s current state. The strategy officers may conduct an internal and external analysis, determine competitive advantages, and create a strategy roadmap. They may take the time to redefine their mission, vision, and values statements.

Alternatively, a business plan provides a structure for ideas to define the business initially. It maps out the more tactical beginning stages of the plan.

Pro Tip: A mission statement is useful for business and strategic plans as it helps further define the enterprise’s value and purpose. If an organization never set its mission statement at the beginning stages of its business plan, it can create one for its strategic plan.

A strategic plan is critical to prioritizing resources (time, money, and people) to grow the revenue and increase the return on investment. The strategic plan may start with reallocating current financial resources already being utilized more strategically.

A business plan will focus on the resources the business still needs to obtain, such as vendors, investors, staff, and funding. A business plan is critical if new companies seek funding from banks or investors. It will add accountability and transparency for the organization and tell the funding channels how they plan to grow their business operations and ROI in the first year of the business.

The scalability of a business plan vs. strategic plan

Another way to grasp the difference is by understanding the difference in ‘scale’ between strategic and business plans. Larger organizations with multiple business units and a wide variety of products frequently start their annual planning process with a corporate-driven strategic plan. It is often followed by departmental and marketing plans that work from the Strategic Plan.

Smaller and start-up companies typically use only a business plan to develop all aspects of operations of the business on paper, obtain funding and then start the business.

Why understanding the differences between a business plan vs a strategic plan matters

It is important to know the key differences between the two terms, despite often being used interchangeably. But here’s a simple final explanation:

A business plan explains how a new business will get off the ground. A strategic plan answers where an established organization is going in the future and how they intend to reach that future state.

A strategic plan also focuses on building a sustainable competitive advantage and is futuristic. A business plan is used to assess the viability of a business opportunity and is more tactical.

10 Comments

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I agree with your analysis about small companies, but they should do a strategic plan. Just check out how many of the INC 500 companies have an active strategic planning process and they started small. Its about 78%,

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Strategic management is a key role of any organization even if belong to small business. it help in growth and also to steam line your values. im agree with kristin.

' src=

I agree with what you said, without strategic planning no organization can survive whether it is big or small. Without a clear strategic plan, it is like walking in the darkness.. Best Regards..

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Vision, Mission in Business Plan VS Strategic Plan ?

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you made a good analysis on strategic plan and Business plan the difference is quite clear now. But on the other hand, it seems that strategic plan and strategic management are similar which I think not correct. Please can you tell us the difference between these two?. Thanks

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Thank you. I get points to work on it

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super answer Thanking you

' src=

Hi. I went through all the discussions, comments and replies. Thanks! I got a very preliminary idea about functions and necessity of Strategic Planning in Business. But currently I am looking for a brief nice, flowery, juicy definition of “Business Strategic Planning” as a whole, which will give anyone a fun and interesting way to understand. Can anyone help me out please? Awaiting replies…… 🙂

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that was easy to understand,

' src=

Developing a strategic plan either big or small company or organization mostly can’t achieve its goal. A strategic plan or formulation is the first stage of the strategic management plan, therefore, we should be encouraged to develop a strategic management plan. We can develop the best strategic plan but without a clear plan of implementation and evaluation, it will be difficult to achieve goals.

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Service Business Vs Product Business: What’s the Difference?

Milos Timotic

  • March 19, 2023
  • For Service Businesses

business plan vs product

The quick answer is that businesses selling physical or tangible items are product-based, whereas businesses that sell non-tangible products such as services are service-based businesses. The problem with this definition is that it barely touches the surface of the differences between the two. They have debated service business vs product business for years. It’s important to clarify these differences for service and product-based businesses everywhere.

Understanding the differences is especially important when selecting your pricing point or when outlining your business model . To begin, we will find the differences between these two main styles of business.

Service Business vs Product Business: What Is the Biggest Difference?

All product-based businesses focus on innovating and introducing their products to the market. This means they need to sell products that not only have high market value but also meet the needs of their clients . They select materials to produce the best quality products. They strive to improve their products with more or new features.

Service-based businesses‌ use their expertise to provide services for their clients. This business model ‌ needs less start-up money t because there’s no need to invest money into producing items. Instead, it only needs equipment that allows you to provide service to your clients.

These business services are often exclusive. They make services to the specifications of their clients. Those services are rarely shared between clients.

These businesses differ in significant ways, and there are pros and cons to each. Choosing a service business can provide an entrepreneur with the ability to make money almost instantly . As an example, copywriters can make content for clients almost immediately when they open their business. In contrast, an entrepreneur with a physical product requires funding to make and promote their product before making money.

Business Risk

business plan vs product

Business risk refers to factors that can threaten a business’s financial goals. These risks could vary from negligible to critical, but no matter what, owners should review risks in their business’s early stages.

The owner of a product business will set their own standards, instead of the customer. Although the customer has a very important role in the business, the power to make the final decision lies in the owner’s hand.

Service businesses‌ have an initial risk of establishing credibility in the market.

Recurring Revenue

Your product will always need to find new clients and create new products to generate profits for your business. This can still be quite lucrative, but slightly less consistent.

In contrast, service businesses have the benefit of potential recurring revenue from clients. Customers often will want to stick with the same company because of familiarity. This helps companies because they can consistently predict revenue. While the company continues to grow, income will multiply as well.

Relationship with Clients

One of the biggest differences between a service business vs product business is their relationships with clients.

Product businesses often have to make and maintain a brand reputation instead of building relationships with their customers. They focus their efforts on building the market position of their product to increase sales .

Service businesses focus their efforts on building a personal relationship with their customers . This is necessary for smaller marketing areas, as unhappy clients may switch to another company if they don’t feel connected to the business. A service-based business needs to build credibility through its relationships with customers to increase sales.

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Financial Management

Product-based businesses have a lot to include in their planning for financial management. They have to consider their inventory, their supply costs, shipping, and even storage. Products have a lot of moving parts for finances, so more things to track.

Services are a lot easier to forecast and budget for. Providers will usually have lower overhead than more product-based businesses, so trimming expenses is easier. . Service providers make money by giving their time and expertise. They don’t need to worry about extra costs to produce tangible goods.

Service-based businesses are less expensive than product-based businesses because of the lack of inventory. Depending on their offerings, service-based businesses also rarely have to worry about physical locations. For example, podcast advertising companies can work on a fully remote basis. This can also save capital.

Marketing Message and Scope

Usually, product businesses have much grander marketing scopes than service-based companies. Product businesses have global marketing strategies that attract customers.  This can give them an advantage over service businesses. Their ability to transport a tangible product across the world can help increase sales.

Customers can purchase a product in the global market via newspapers, the internet, magazines, or word of mouth. Service-based businesses place more focus on customer experience and customer satisfaction . The problem with this is that they are ‌restricted to a small target market. If they cannot provide their services around the world, they will miss out on revenue.

Product-based businesses need to invest large amounts of money into advertising their products. The costs climb if they want to go global.

Product Quality vs. Customer Experience

For a product business, quality is the key to how much a product can grow. In contrast, a service business views its clients as key to where their growth lies. All companies want their clients to be satisfied with their services or products, or they won’t thrive.

In service businesses, clients expect to find expertise and an outstanding experience. If they don’t find it, they won’t return. Product businesses need to provide products that match the value that their customers expect . If they fail, customers may not buy the product again or even prevent prospective customers from making a purchase.

Hiring Candidates

Most product businesses hire candidates that are knowledgeable in their domain. Prospective employees need to be familiar with the newest technology products that they would need to use or sell. Product businesses put high

In a service business, communication skills are just as important as knowledge in the field . In certain cases, marketing and interpersonal skills are required to be hired for certain roles. Sometimes even a person’s style of dress can decide if they get the job.

Products have the singular goal of meeting the needs of a customer; if it does not meet those needs, customers will most likely return the item. With products, prospective customers can easily discern the product’s value and whether it’s worth the money to purchase . Customers can rate a product online, which can affect the customer base positively or negatively.

When selling a service, it’s crucial to highlight what makes your service special and how it can meet the customer’s needs. Most marketing services need to build relationships with their customers and customize their services to fit whatever the customer needs.

FAQs about service business vs product business

1. what is the primary difference between a service-based business and a product-based business.

The nature of what they sell is the main distinction between a service-based firm and a product-based business. Although a product-based business sells tangible goods to customers, a service-based business provides customers with intangible services.

2. Which type of business is easier to start, a service business or a product business?

Because there are often lower startup costs, launching a service-based firm is frequently simpler than beginning a product-based business. The startup costs of service-based firms may be lower, and inventory management requirements are frequently reduced.

3. What are some advantages of running a service-based business compared to a product-based business?

Running a service-based firm has the benefit of often being more adaptable than running a product-based business. While products have a fixed design, services can be tailored to each customer’s specific demands. In addition, since services may be delivered more quickly than items, turnaround times can be shortened.

4. Which type of business typically requires more capital to start: a service business or a product business?

In general, it costs more money to launch a product-based firm than a service-based business. A product-based corporation may need to make expensive investments in manufacturing facilities, machinery, supplies, and transportation.

All that may be needed to launch a service-based firm is a computer and an internet connection.

5. What are some challenges of running a product-based business that are different from those of a service-based business?

Running a product-based company can be more difficult than running a service-based company because of the complexity of managing inventory and the supply chain.

In order to remain competitive, product-based businesses may also need to continuously innovate and enhance their products, which may necessitate substantial investment in research and development.

6. What are some examples of industries that are primarily service-based businesses?

Consulting, accountancy, legal services, healthcare, education, and hospitality are a few examples of sectors that are predominantly service-based firms. These sectors sell services rather than tangible goods.

7. How does marketing differ for a service-based business versus a product-based business?

Marketing for service-based firms frequently entails forming connections and winning over potential customers’ confidence.

The use of networking, recommendations, and content marketing can accomplish this. Advertising and product demos may be used in the marketing of product-based firms to highlight the distinctive qualities and advantages of the goods.

8. What are some key factors to consider when deciding whether to start a service-based or product-based business?

While choosing between a service-based or product-based firm, it’s important to take into account a number of important aspects, such as the amount of startup capital needed, the complexity of the supplier risk management , the target market, and the level of industry competition.

9. What are some common revenue models for service-based businesses versus product-based businesses?

While revenue models for product-based firms often include selling tangible products at a markup, revenue models for service-based organizations frequently involve charging for hourly or project-based services.

Moreover, both kinds of companies might use subscription-based business models.

10. How does customer acquisition differ for service-based businesses versus product-based businesses?

Building relationships and word-of-mouth recommendations are frequent methods of customer acquisition for service-based organizations, whereas advertising and product demonstrations are frequent methods of customer acquisition for product-based firms.

Businesses that sell products could also need to spend money on packaging and branding to draw in customers.

Service Business Vs Product Business, Which Is Better?

Whether you are selling products or services, you will need a different mindset to manage each well . Creating products requires knowledge of customer needs and gaps in the market, and where your product fits in. You need to invest both time and money into taking a product from idea to reality.

Service-based businesses ‌need knowledge of what intangible services customers need.

Both of these businesses have challenges like high production costs or small target markets. If you want to make it in either of these businesses, you will need to understand your target market and have a business plan that will meet its demands. Choosing the right service business vs product business can be extremely profitable if done right. Make sure that you know the differences and characteristics of each to start your business venture.

There’s evidence that even businesses selling what should be one-off items are incorporating RR into their practices.

The costs of gaining and retaining clients for a service business can be quite high. Research turns up many reasons for service businesses to spend on marketing.

Communication skills are vital in producing and selling products. “conveying ideas effectively” is the same as communication. The sentence contradicts itself and is flatly untrue.

Conflicts with earlier statements about service businesses not needing marketing.

If you liked this article on service business vs product business , you should also check out this one with service business websites .

We also wrote about similar topics like how to market a service business , how to scale a service business , how to sell a service business , how to run a service business , service businesses with low startup costs , and services landing page designs.

Milos Timotic

Milos Timotic

Technical Lead

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Service Business vs. Product Business

  • December 26, 2022

author-avatar

Updated: December 23, 2022

Starting a business can be one of the most rewarding and challenging things a person can do.

But before you start racking up sales, there’s one critical question to answer – what are you going to sell?

Businesses that sell services deliver something non-physical that solves a problem for customers.

On the other hand, product businesses offer tangible goods that buyers can touch and see.

Which option you choose will determine how your entire operation is structured. So which one is right for you? Let’s take a closer look at what are the characteristics of each of these two business models.

Which Business is Easier to Start?

business plan vs product

Many folks starting a new business may not have a ton of resources at their disposal. They may be short on money, time, manpower, or all of the above. How much startup resources you will need is the first part that you need to figure out before moving forward. Because if you don’t have enough resources, then your business idea won’t be able to take off. On the other hand, if you have more than the minimum amount of resources you can potentially accelerate your growth or give yourself more runway to get everything sorted out.

That’s why it’s crucial to understand what are the costs involved in getting each type of business off the ground .

Service Business

Service businesses are typically the simplest to start. All you’ll need is a skill that’s worth selling, a website, and a little marketing.

As for the skills, this can be anything from photography to landscaping to business consulting – anything people would be willing to pay you for in exchange for your expertise.

Startup costs are low, usually a few hundred dollars at most. Because of the relatively scant requirements, a service-based business typically gets going faster than a product businesses.

From a tax perspective, it is also a the most simple configuration. An example of a very easy to start service business is driving for a ride sharing platform or offering freelance services to other companies.

However, just because its simple, doesn’t mean that you won’t need any planning. Having a list of prospective customers, a marketing strategy, and a comprehensive business plan are all necessary to make sure your service business takes off and becomes profitable.

Product Business

Product-based businesses are generally much more complicated.

First, you’ll need to determine what your product will be and design it. The product development phase is critical in ironing out all the detail of your product before it goes into production. This stage requires multiple prototypes and is part of the upfront investment you need to be prepared to have.

Then, you’ll either need to make it yourself or find a manufacturer, which can be a long process. This can mean setting up a workspace with all the necessary tools and materials. Or if you look for a manufacturer, you need to make sure that you meet the minimum order requirements.

Finally, you’ll have to take care of any trademarking, patenting, or licensing to ensure you have the rights to your new product.

Of course, you also need to take care of the same steps that service businesses do, like setting up a website and marketing your product.

For these reasons, product businesses are typically slower to take from idea to market. They require a large number of business decisions to be made and a physical location that you can operate out of.

Which One Requires More Capital/Risk?

Capital/risk is another crucial factor in determining the right kind of business for you.

For some, it’s a matter of how much money they’d like to risk on their idea. For others, it’s a matter of necessity due to limited funds or an otherwise tight financial situation.

Here are some crucial things to consider.

As we discussed above, a service-based business doesn’t take much time to get started. For the same reasons, they’re also less capital-intensive.

Starting up a service business may only cost a few thousand dollars in many cases, and sometimes less! This will cover your:

  • Initial marketing
  • Office space

With relatively little money invested, you’ll have a reasonable limit on the amount you can lose in the worst-case scenario. And depending on the type of service you provide, you can also start seeing profits from your completed projects fairly quickly.

The additional steps required to bring a physical product from idea to reality are fairly expensive ones.

Investing in equipment or placing large orders with manufacturers can tie up large sums of money in your business with no guarantee you’ll ever get it back.

The many potential pitfalls of designing and building a product can also deplete your cash reserves quickly if you don’t manage costs effectively.

Then, you’ll be faced with the decision of whether to invest further or take your losses and move on.

All of this gives a product-based business a significantly higher need for startup capital. Additionally, you need to have a good idea of how long it will take to recover your investment or if you forsee needing additional injections of capital at a later stage.

Which One is Easier to Scale?

Companies that are lucky enough to take off, another challenge awaits – taking them from thriving small businesses to bigger, an even more profitable organization.

It’s vital to know that service and product businesses have major differences when it comes to scaling up.

Service businesses thrive on the customer experience of an employee solving a customer or client’s problem. However, that personal touch can be difficult to replicate on a large scale. In particular if it is the business owner running the core business operation.

Business owners with specialized skills only have a certain number of hours in a day they can work, and may struggle to find similarly competent employees.

This makes scaling up slower and more complicated for service businesses.

Product businesses also face some hurdles when growing, particularly in ensuring they have the manufacturing capacity to produce the number of items they need. They can also face logistics challenges.

However, scaling up a successful product is significantly easier and quicker once demand has been proven. Think about something like the iPhone; once it became a massive success, Apple was able to scale up by increasing its manufacturing capacity , making it one of the world’s most valuable companies.

Which One Can Make More Money?

When it comes to making real, significant money in the business world, there’s simply no way to do it without scaling.

As we’ve just discussed, product businesses can scale more easily, thereby opening themselves up to exponential financial growth.

Service businesses can face difficulties shrinking costs as they grow, limiting the ability to grow profits as quickly.

Grow Your Business with the Help of an Experienced Financial Partner

As you can see, both product businesses and service businesses each have unique advantages and drawbacks.

While service businesses are faster to get started and lower risk, product businesses can scale better and faster, leading to more profit in the long run.

No matter what kind of business you’re considering starting, all successful ones have something in common – they have a strong financial plan and they stick to it.

Unfortunately, that’s easier said than done. This is where Vertical CPA comes in. Our experienced financial professionals will work to understand your business and goals and help craft the perfect plan to meet your needs.

Contact us today to get started on the road to business success!

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Product Plan: What is it & How to Create it the Right Way?

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“A goal without a  plan  is just a wish.”

Launching a new product is tough. How tough you ask? Well, according to Harvard Business School professor Clayton Christensen, there are over 30,000 new products introduced every year, out of which, a whopping 95 percent fail. Yep, it’s a bloodbath out there.

If you think you can bring a new product to the market without a plan in place, good luck! Planning plays a key role in whether your product is going to be a raving success of a heartbreaking failure. This is where a good project plan comes in.

Smart product managers know that it’s foolish to rely on memory to plan, execute, and deliver a project on time, especially when many of these projects can take months and even years to finish. Having all project deliverables, tactics, and tasks documented helps managers keep their team organized and focussed in order to maximize their chances of a successful launch.

Before we talk about how to write a product plan and what things to include in your roadmap, let us first briefly explore what a product plan really is. Read on…

What is a Product Plan? (Definition)

A product plan, also known as a product roadmap, is a broad overview of the upcoming product, its timelines, budget, resources, tasks, and much more.

The product plan describes what the product team is set out to build, the reason for building the product, and by when the product is ready for launch. If the product is already launched, roadmaps are used as a way of listing out features and updates that will be rolling out in the future.

An employee planning a product management plan

More than a “to-do list”, a product plan acts as a guide for product managers and all the stakeholders involved, keeping them in the loop with development and managing expectations.

It acts as a strategic tool, keeping you focused on your objectives and product timeline while at the same time, improves communication between stakeholders. Product plans are usually used by software companies and organizations that develop technological products.

Why Creating a Product Plan is Important?

According to research by KPMG, an unbelievable  70%  of organizations have suffered at least one project failure in the prior 12 months and 50% of respondents indicated that their project failed to consistently achieve what they set out to achieve.

While there can be many reasons for product failures, a common issue is the lack of preparation before a product’s execution.

“Every minute you spend in planning saves 10 minutes in execution; this gives you a 1,000 percent return on energy!”  ― Brian Tracy

When the development team is not clear on the goals and objectives behind a product, what needs to be developed and delivered, who needs to do what, they are simply waiting for a disaster to happen.

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This is why product managers often rely on documentation like product plans to make sure every stakeholder is onboard with the product objectives and are clear on their roles and responsibilities to make it a success. A formal document, describing precisely what needs to be done and by when helps keep everyone accountable and helps avoid any ambiguity.

All in all, a product plan:

  • Describes what the product entails so that all stakeholders know exactly what is expected of them and what the final product should look like.
  • Keeps everyone on the development team accountable.
  • Provides a roadmap that product managers can use to allocate tasks, responsibilities, and budget accordingly.
  • Keeps the team focused on product goals and protects them from straying away from what is expected.
  • Ensures proper utilization of resources and keep things under budget.

Having a plan in place is really crucial to stay on top of product development and coordinate the efforts of all stakeholders.

Communicating deliverables, action steps, timetables, task ownership are more need to be planned before product development begins. Here are some of the key benefits of creating a product plan:

1. Gives your Team a Sense of Direction

When product managers make a plan, it kicks off the product development process and gives the entire team some instructions to follow and refer to. By assigning them tasks and responsibilities, managers give the entire team a sense of direction and roadmap to follow and oblige.  ‍

Read more:   What is a Product Requirements Document & How to Create One ?

2. Keeps Everyone Accountable

During the planning phase, all team members are assigned roles and responsibilities. The clearer you define these responsibilities, the better you can keep people accountable for success or failure.

3. Proper Resource Allocation

Product failure can lead to a wastage of time, effort, and a lot of money for the organization. Product planning suggests teams consider the necessary resources needed to finish a project.

Employees allocating resources for product managment plan

The planning phase is the correct time to brainstorm and allocate resources in order to ensure the smooth execution of the development process.

4. Forecasts Problems

When you plan, you not only plan for success but also a failure. Anticipating product limitations, possible roadblocks, and challenges is one of the most important points to keep in mind while planning.

Your project is bound to face challenges at different levels of development. Being ready and having a contingency plan in place before the problem occurs gives a much-needed confidence boost to the development team. It relieves pressure off of the team as well as stakeholders.

5. Take it to the Finish Line

Finishing projects is more difficult than starting them. When you have a clearly defined endpoint, you are more likely to visualize success and reach for it with all your might, without getting sidetracked.

Planning ensures that managers, as well as team members, are well equipped to take the product to the finish line.

Read more:  Product Development Process: Definition & Key Stages!

How to Create a Product Plan? Follow these Steps!

Now that you know what a product plan really is, it’s time to deep dive into the elements of a product plan.

Step 1. Define the Why

Understanding the what and why of the product is the first step to designing a plan. When you clearly know what you need from a product, you are better able to explain it in your document, and as a result, better explain it to team members and stakeholders.

Why you are building the product? How does it benefit the organizational goals? What are the features and functionalities that need to be developed for the product?

Additionally, you can include product differentiators that make the product stand out from the competition. All such questions need to be clear in your mind before you start documenting a product plan.

Step 2. Specify What You Need

The next step in product planning is gathering requirements and documenting them. If you don’t know where to start, begin by collaborating with your sales and customer reps as they are the ones who interact with your target customer on a regular basis.

Note down customer expectations, pain points, commonly asked features, and add them to your upcoming product. You can also carry out a customer survey, engage directly with your users to find out their likes and dislikes in your current product offering, and devise a plan accordingly.

Step 3: Assign Responsibilities

Once you know why you are building and what you need to build, the next step in product planning is to assign roles and responsibilities. You can include each person’s full name, position, department, and the part they will play in making the product a success.

Making people aware of what is expected of them in terms of commitment keeps them more accountable and sincere in their work. Moreover, carefully assigning tasks is crucial to remove all confusion and ambiguity during the development phase.

Step 4: Add Any Limitations

The team working on the product should be made aware of all the challenges they could face in the future. They should also be equipped with the necessary resources and knowledge to navigate such challenges without getting off-track from their mission. Preparing for trouble is the best thing you can do to ensure development.

Step 5. Assign a Timeframe

Without a timeframe, your product could take too long to come to the market. Keep the team accountable by assigning a specific timeframe for every product milestone.

An employee scheduling her time for product management plan

Step 6. Share Your Product Plan

Once done creating, you need to share the product plan with your team and stakeholders. Sharing your product plan helps to gain support from upper management while at the same time increasing

team participation from the get-go. Use a collaboration tool like Bit to create product roadmaps as they can help you bring all relevant stakeholders under one roof and get team feedback and suggestions.

Create a Collaborative Product Plan with Bit

Ready to create your product plan document? Well, we have got the perfect tool for you!

Bit.ai is a new age online document collaboration tool that helps anyone create awesome product plan documents, product requirements documents, instruction manuals, and other company documents in minutes. Bit is the dream tool to help teams transform the planning process, by making it interactive and collaborative.

business plan vs product

Simply create a workspace, add your team members, and start creating your workplace documents like product plans quickly! You can further share these documents with external clients, partners, agencies, etc., and get detailed insights on how they interacted with your documents! Cool, right?

Bit features infographic

Here are some key reasons to use Bit to create product roadmaps or planning documents:

  • Collaborate with teammates in real-time and create plan product roadmap together.
  • Get management feedback in real-time using @mentions and highlight features as every document comes with its separate comment stream.
  • Create, share, and store documents related to the product in one place without going back and forth to your cloud storage services.
  • Bit has a plethora of amazing templates to kickstart your work.
  • Content management capabilities allow teams to store their PDFs, videos, images, charts, and more inside one platform for easy access. Say goodbye to Google Drive and Dropbox!
  • Bit documents are nothing like you have ever seen. Create interactive docs and embed Airtable blocks, Google spreadsheets, PDFs, video tutorials, Typeform surveys- basically anything with a link inside your document.

Final Words

A product plan is a product manager’s favorite tool as it cuts their work in half by guiding the team to success without much involvement from the manager. Once created, product plans document work on their own as they lead the product team through every challenge and keeps them accountable for their actions.

It communicates product goals with internal and external stakeholders, keeping the entire product lifecycle transparent and productive. Product plans are not a guarantee for product success but they are a step in the right direction.

Note that the product plan is a living document that needs to be adjusted and improved upon as the situation demands.

This is why document collaboration tools like Bit are perfect for creating such documents as you can edit any document in real-time and make changes as your company demands. So, what are you waiting for? Start creating your product plan documents today, with a little help from Bit.ai! Good luck!

Further reads:

  • How To Create Product Launch Marketing Documentation?
  • Product-Market Fit: What is it & How to Achieve it?
  • What is Product Adoption & How to do it Right?
  • How to Create an Agile Product Roadmap?
  • What is an Implementation Plan & How to Create One?
  • How to Create a Procurement Management Plan: Step by Step Guide
  • How to Create a Strategic Process Improvement Plan?
  • Software Product Development: Definition, Types, Methodologies & Process!

business plan vs product

Process Improvement Plan: What is it & How to Create It? (Steps Included)

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business plan vs product

About Bit.ai

Bit.ai is the essential next-gen workplace and document collaboration platform. that helps teams share knowledge by connecting any type of digital content. With this intuitive, cloud-based solution, anyone can work visually and collaborate in real-time while creating internal notes, team projects, knowledge bases, client-facing content, and more.

The smartest online Google Docs and Word alternative, Bit.ai is used in over 100 countries by professionals everywhere, from IT teams creating internal documentation and knowledge bases, to sales and marketing teams sharing client materials and client portals.

👉👉Click Here to Check out Bit.ai.

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Business Plan vs. Business Model

Back to Business Plans

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on February 19, 2023 Updated on December 11, 2023

Business Plan vs. Business Model

If you’re starting a business , you have a business model, whether you know it or not. A business model is the foundation of any business idea; it basically outlines how the concept offers value and potential for growth. Essentially, a solid business model ensures that the business will make money. 

A business plan , on the other hand, is the business owner’s plan to put that model into action. It’s much more detailed and includes financial projections, objectives, management decisions and further steps. 

Still unsure? Have no fear, this handy guide lays out the differences between a business plan and a business model so that you know exactly what you and your business need to succeed.  

  • Business Model

In simple terms, a business model is how the business will make money. Selling ice to eskimos, for instance, is a bad business model. Selling team jerseys to rabbit sports fans, on the other hand, is a solid business model. 

The components of a business model are best illustrated by Swiss entrepreneur Alexander Osterwalder’s Business Model Canvas, which is a visual representation with nine sections. Four sections represent internal elements of a business that enable it to function and are related to costs. 

Four other sections represent external elements that enable the business to bring in revenue and are related to the customer. The ninth section is the business’ value proposition. 

image

Value Proposition

The value proposition is at the heart of your business model. Your value proposition, which should be no more than two sentences long, needs to answer the following questions:

  • What are you offering
  • Whose problem does it solve
  • What problem does it solve
  • What benefits does it provide
  • How is it better than competitor products

Key Activities

Key activities are all the activities required to run the business and create the proposed value. These can include product development and distribution and any other necessary activities.  

Cost Structure

The cost structure is a sum of all you’ll need to spend to make the business function. It’s the costs you’ll incur to run the business and bring in revenue. 

Key Partners

Key partners are external partners involved in delivering value, such as vendors and suppliers, or maybe a bank. 

Key Resources

Key resources are any necessary practical elements that come with a cost. These might include your office space, employees, and equipment like computers. 

Revenue Streams

Revenue streams are the ways in which you receive payment from customers. You may have more than one revenue stream, such as via direct sales and subscriptions.

Customer Segments

Customer segments are the groups of people to whom you provide goods or services. In other words, your target market. Maybe your products are aimed at younger women, for instance, or older men. Whatever your target segments, you should build customer personas of each group so that you know how and where to reach them with your marketing.

Customer Relationships

Customer relationships refer to how you interact with your customers to deliver value. Your interactions may be online only, by phone, in-person, or all of the above. 

Channels refer to how you reach your customers, such as social media, internet search, direct sales calls, trade shows, and so on. 

To Summarize

If you’re just starting a business, the Business Model Canvas is a great way to understand and examine your business model. One thing to remember is that the elements you put in your Canvas will be based on assumptions that will at some point be tested in the market and adapted as needed. 

Another thing to remember is that you do not need to do a Business Model Canvas. It’s merely an exercise that can help provide insight into your business model.  

  • Business Plan

A business plan is a detailed document that describes how the business will function in all facets. The key is in the “plan” part of the name. It will specify how you’ll launch your business, gain customers, operate your company, and make money. A business plan, however, is not a static document . 

The initial version will be based largely on assumptions, supported by research. As you run your business you’ll constantly learn what works and what does not and make endless tweaks to your plan.

Thus, creating a business plan is not a one-time action – it’s a dynamic and continuous process of crafting and adapting your vision and strategy. 

You’ll present your business plan to potential backers, though in recent years some investors have begun to embrace the Business Model Canvas as a tool to assess a business’ potential. 

A strong business plan includes eight essential components .

1. Executive Summary 

The executive summary is the initial section of your business plan , written last, summarizing its key points. Crucial for capturing investors’ and lenders’ interest, it underscores your business’s uniqueness and potential for success. It’s vital to keep it concise, engaging, and no more than two pages.

2. Company Description/Overview

This section provides a history of your company, including its inception, milestones, and achievements. It features both mission (short-term goals and driving force) and vision statements (long-term growth aspirations). Objectives, such as product development timelines or hiring goals, outline specific, short-term targets for the business.

3. Products or Services Offered

Detail the product or service you’re offering, its uniqueness, and its solution to market problems. Explain its source or development process and your sales strategy, including pricing and distribution channels. Essentially, this section outlines what you’re selling and your revenue model.

4. Market Analysis 

  • Industry Analysis : Research your industry’s growth rate, market size, trends, and future predictions. Identify your company’s niche or sub-industry and discuss adapting to industry changes.
  • Competitor Analysis : Examine main competitors , their unique selling points, and weaknesses. Highlight your competitive advantages and strategies for maintaining them.
  • Target Market Analysis : Define your target market , their demographics, needs, and wants. Discuss how and where you’ll reach them and the potential for market shifts based on customer feedback.
  • SWOT Analysis : Break down your company’s strengths, weaknesses, opportunities, and threats. Detail your unique attributes, potential challenges, market opportunities, and external risks, along with strategies to address them.

5. Marketing and Sales Strategies

  • Marketing and Advertising Plan : Use insights from your target market analysis to decide advertising channels, emphasizing platforms that best reach your audience, like TikTok over Instagram. Develop a concise value proposition to be central to all marketing, detailing how your product addresses specific needs.
  • Sales Strategy and Tactics : Define where and how you’ll sell, such as online, in-store, or through direct sales calls. Sales tactics should highlight the customer’s needs, presenting your solution without overly aggressive promotion.
  • Pricing Strategy : Decide on pricing based on market positioning, whether you aim to be a discount or luxury option. Ensure prices cover costs and yield profit, and position your product in a manner that aligns with the chosen price range. Justify your chosen pricing strategy in this section.

6. Operations and Management 

  • Operational Plan : Outline daily, weekly, and monthly operations, specifying roles, tasks, and quality assurance methods. Include supplier details and order schedules, ensuring clarity on key business functions and responsibilities.
  • Technology Plan : For tech-based products, detail the development plan, milestones, and staffing. For non-tech companies, describe the technology tools and software you’ll employ for business efficiency.
  • Management and Organizational Structure : Define who’s in charge, their roles, and their backgrounds. Discuss your management strategy and forecast the development of your organizational hierarchy.
  • Personnel Plan : List current and future hires, specifying their roles and the qualifications necessary for each position. Highlight the significance of each role in the business’s operations.

7. Financial Plan 

  • Startup Costs : Clearly detail every anticipated cost before starting operations. This will be vital for understanding the initial investment required to get the business off the ground.
  • Sales Projections : Estimate monthly sales for the first year, with an annual forecast for the next two years.
  • Profit and Loss Statement : An overview of revenue minus costs, resulting in either a profit or loss.
  • Cash Flow Statement : Provides clarity on the business’s liquidity by showing cash inflows and outflows over a specific period.
  • Balance Sheet : Displays the company’s net worth by detailing its assets and liabilities.
  • Break-even Analysis : Understand at which point revenues will cover costs, helping to predict when the business will start making a profit.
  • Funding Requirements and Sources : Enumerate the required capital and the sources of this funding. This should also include the purpose for which these funds will be used at different stages.
  • Key Performance Indicators (KPIs) : Identify the metrics vital for measuring the company’s performance. Use these indicators to spot challenges, understand where improvements can be made, and pivot strategies as necessary. Ensure that each KPI aligns with the business’s objectives and offers actionable insights for growth.

Remember, although the financial section might seem daunting, it is pivotal for understanding the economic feasibility of your business. Proper financial planning helps in making informed decisions, attracting investors, and ensuring long-term sustainability. Don’t hesitate to engage financial experts or utilize tools and software to ensure accuracy and comprehensiveness in this section.

8. Appendices

The appendices section of a business plan is a repository for detailed information too extensive for the main document. This can include resumes of key personnel, full market research data, legal documents, and product designs or mockups. By placing this data in the appendices, it keeps the main plan concise while allowing stakeholders access to deeper insights when needed. Always ensure each item is clearly labeled and referenced at the relevant point in the main document.

As you can see, business models and business plans have some similarities, but in the main they are quite different. Your business model explains the foundational concept behind your business, while a business plan lays out how you’ll put that model into action and build a business. 

When you’re starting a business, it’s best to have both, as the work of getting them done involves learning about your business from every angle. The knowledge you’ll gain is likely to be invaluable, and could even be the difference between success and failure. 

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Google’s Gemini is now in everything. Here’s how you can try it out.

Gmail, Docs, and more will now come with Gemini baked in. But Europeans will have to wait before they can download the app.

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In the biggest mass-market AI launch yet, Google is rolling out Gemini , its family of large language models, across almost all its products, from Android to the iOS Google app to Gmail to Docs and more. You can also now get your hands on Gemini Ultra, the most powerful version of the model, for the first time.  

With this launch, Google is sunsetting Bard , the company's answer to ChatGPT. Bard, which has been powered by a version of Gemini since December, will now be known as Gemini too.  

ChatGPT , released by Microsoft-backed OpenAI just 14 months ago, changed people’s expectations of what computers could do. Google, which has been racing to catch up ever since, unveiled its Gemini family of models in December. They are multimodal large language models that can interact with you via voice, image, and text. Google claimed that its own benchmarking showed that Gemini could outperform OpenAI's multimodal model, GPT-4, on a range of standard tests. But the margins were slim. 

By baking Gemini into its ubiquitous products, Google is hoping to make up lost ground. “Every launch is big, but this one is the biggest yet,” Sissie Hsiao, Google vice president and general manager of Google Assistant and Bard (now Gemini), said in a press conference yesterday. “We think this is one of the most profound ways that we’re going to advance our company’s mission.”

But some will have to wait longer than others to play with Google’s new toys. The company has announced rollouts in the US and East Asia but said nothing about when the Android and iOS apps will come to the UK or the rest of Europe. This may be because the company is waiting for the EU’s new AI Act to be set in stone, says Dragoș Tudorache, a Romanian politician and member of the European Parliament, who was a key negotiator on the law.

“We’re working with local regulators to make sure that we’re abiding by local regime requirements before we can expand,” Hsiao said. “Rest assured, we are absolutely working on it and I hope we’ll be able to announce expansion very, very soon.”

How can you get it? Gemini Pro, Google’s middle-tier model that has been available via Bard since December, will continue to be available for free on the web at gemini.google.com (rather than bard.google.com). But now there is a mobile app as well.

If you have an Android device, you can either download the Gemini app or opt in to an upgrade in Google Assistant. This will let you call up Gemini in the same way that you use Google Assistant: by pressing the power button, swiping from the corner of the screen, or saying “Hey, Google!” iOS users can download the Google app, which will now include Gemini.

Gemini will pop up as an overlay on your screen, where you can ask it questions or give it instructions about whatever’s on your phone at the time, such as summarizing an article or generating a caption for a photo.  

Finally, Google is launching a paid-for service called Gemini Advanced. This comes bundled in a subscription costing $19.99 a month that the company is calling the Google One Premium AI Plan. It combines the perks of the existing Google One Premium Plan, such as 2TB of extra storage, with access to Google's most powerful model, Gemini Ultra, for the first time. This will compete with OpenAI’s paid-for service, ChatGPT Plus, which buys you access to the more powerful GPT-4 (rather than the default GPT-3.5) for $20 a month.

At some point soon (Google didn't say exactly when) this subscription will also unlock Gemini across Google’s Workspace apps like Docs, Sheets, and Slides, where it works as a smart assistant similar to the GPT-4-powered Copilot that Microsoft is trialing in Office 365.

When can you get it? The free Gemini app (powered by Gemini Pro) is available from today in English in the US. Starting next week, you’ll be able to access it across the Asia Pacific region in English and in Japanese and Korean. But there is no word on when the app will come to the UK, countries in the EU, or Switzerland.

Gemini Advanced (the paid-for service that gives access to Gemini Ultra) is available in English in more than 150 countries, including the UK and EU (but not France). Google says it is analyzing local requirements and fine-tuning Gemini for cultural nuance in different countries. But the company promises that more languages and regions are coming.

What can you do with it? Google says it has developed its Gemini products with the help of more than 100 testers and power users. At the press conference yesterday, Google execs outlined a handful of use cases, such as getting Gemini to help write a cover letter for a job application. “This can help you come across as more professional and increase your relevance to recruiters,” said Google’s vice president for product management, Kristina Behr.

Or you could take a picture of your flat tire and ask Gemini how to fix it. A more elaborate example involved Gemini managing a snack rota for the parents of kids on a soccer team. Gemini would come up with a schedule for who should bring snacks and when, help you email other parents, and then field their replies. In future versions, Gemini will be able to draw on data in your Google Drive that could help manage carpooling around game schedules, Behr said.   

But we should expect people to come up with a lot more uses themselves. “I’m really excited to see how people around the world are going to push the envelope on this AI,” Hsaio said.

Is it safe? Google has been working hard to make sure its products are safe to use. But no amount of testing can anticipate all the ways that tech will get used and misused once it is released. In the last few months, Meta saw people use its image-making app to produce pictures of Mickey Mouse with guns and SpongeBob SquarePants flying a jet into two towers. Others used Microsoft’s image-making software to create fake pornographic images of Taylor Swift .

The AI Act aims to mitigate some—but not all—of these problems. For example, it requires the makers of powerful AI like Gemini to build in safeguards, such as watermarking for generated images and steps to avoid reproducing copyrighted material. Google says that all images generated by its products will include its SynthID watermarks. 

Like most companies, Google was knocked onto the back foot when ChatGPT arrived. Microsoft’s partnership with OpenAI has given it a boost over its old rival. But with Gemini, Google has come back strong: this is the slickest packaging of this generation’s tech yet. 

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Nightmare on Wall Street: A Lyft typo projected profit to be 10x better than it really is.

  • Lyft mistakenly forecast 500 basis points of margin improvement for 2024, causing a stock surge.
  • The error was later corrected to 50 basis points, and the shares came back to earth.
  • Despite the typo, Lyft predicts healthy growth in rides for 2024.

Insider Today

Wall Street has been demanding more profit from tech companies, but this is overdoing it.

On Tuesday, Lyft reported results and included a surprisingly bullish forecast. A closely watched profit margin should expand by about 500 basis points in 2024.

This is based on adjusted EBITDA, which strips out a bunch of costs. But still, investors were paying close attention, and the stock surged more than 60% in after-hours trading.

The problem is that this was a typo. Let's call it an uber-typo.

A short while later, Lyft put out a corrected press release saying that this profit margin will improve by roughly 50 basis points, not 500. This is a huge difference, when you consider that Lyft's gross bookings totaled almost $14 billion in 2023.

Let's say Lyft repeats that top-line performance in 2024. 5% (500 basis points) of $14 billion is $700 million. But 0.5% (50 basis points) of $14 billion is only $70 million.

So Lyft was off by about $630 million.

Wall Street reacts

Wall Street analysts even published research responding to Lyft's erroneous forecast.

One analyst wrote that 500 basis points of EBITDA margin expansion was one of the key new datapoints to emerge from the results and noted that Wall Street had been looking for margins to improve by only about 100 basis points.

After Lyft corrected its typo, the stock dropped back down, although it was still up 16% in after-hours action on Tuesday.

I asked the company's investor relations department and its public relations department how the typo happened. No response so far.

Company earnings releases are intensely choreographed affairs, especially when it comes to forecasts. These are usually put together carefully by quizzing the CEO and all the major leaders of business divisions. Accounting, legal, and other departments get involved and the numbers are checked and re-checked over and over again before earnings day.

But, no matter how hard you try, typos can creep in. For instance, I wrote "billions" instead of "millions" in a story edit recently, until my boss caught it. The published story was accurate.

Why Lyft stock isn't down more

And there were other things to like about Lyft's results. The company forecast healthy growth in rides for 2024. And there will still be some improvement in margins. Just not 500 basis points.

I asked the Wall Street analyst if they were planning to change their first-take on the Lyft numbers.

"Nah… taking it to 5,000 bps," the analyst jokingly replied.

business plan vs product

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business plan vs product

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