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Apr 21, 2011 - 2 minute read - Comments - business planning

What Is A Business Plan?

The Government of Canada’s Business Services For Entrepreneurs website defines a business plan as:

“A business plan is a written document that describes your business, its objectives and strategies, the market you are targeting and the financial forecast for your business. It will assist in setting realistic and timely goals, help secure external funding, help measure your success, clarify operational requirements and establish reasonable financial forecasts. Preparing your plan will help you focus on how your new business will need to operate to give it the best chance for success.”

This is a good definition of what a business plan is but I think it is important to describe what a business plan is not:

  • The business plan is not where you come up with your business idea. This should be completed before you get to the business planning stage.
  • It is not for developing a business model. A business model is a system for making money. Some businesses have straightforward business models that have stood the test of time. Some businesses have business models that need to be tested because they are blazing a new trail. Your business model should be settled before you get to the business planning stage.
  • It is not a feasibility study. A feasibility study is used to test a business idea to see whether it stands a good chance of becoming a successful business. There is some overlap between a business plan and a feasibility study but studying feasibility is an investigation and not a plan. Lessons learned in the feasibility stage can be applied to the business planning stage.

For an idea that is not unique and has proven business models built around it in other neighbourhoods or cities, a feasibility study may not be necessary. It’s important to understand where you are in the process of starting a business. Trying to complete the process out of order or trying to skip steps will limit your chance at success.