Key Takeaways

  • The nature of a business plan is both strategic and practical: it defines vision, sets goals, and provides a structured roadmap for operations and financing.
  • Core parts include market analysis, financial planning, management, and competitive strategy, which help investors and stakeholders assess viability.
  • The length of a business plan depends on purpose and audience—ranging from a lean internal plan to a detailed investor-facing document.
  • Startups use business plans to attract funding, clarify strategy, and reduce risk, while established firms use them to scale, adapt, or restructure.
  • A business plan also acts as a communication tool, showing lenders, employees, and partners that the company is serious and prepared.
  • From a legal perspective, it should address entity formation, compliance, intellectual property, and contracts, reducing risks and building investor trust.
  • Business planning supports long-term sustainability and succession planning, protecting owners’ legacies while ensuring continuity.

What Are the Parts of a Business Plan?

Even if you just write on an envelope a few ideas about your business strategy, you've started a business plan. Business plans can be helpful, as they list all the tasks necessary to run a company. Entrepreneurs use them to explain their vision to possible investors. These plans can be used by firms that want to attract important employees, find potential business prospects, handle suppliers, and understand how to better manage their companies.

Items to include are the industry, the business concept, the business structure, what the service or product is, and what your marketing plan is in order for the company to be successful.

The marketplace section will talk about defining and analyzing possible customers. This includes where and who they are, what drives them to buy, and so on. The financial section includes your cash flow and income statement, a balance sheet, and additional financial ratios, including break-even analyses. You may want to invest in an accountant and a spreadsheet software program for this. There are seven main components in a business plan, including:

  • Market strategies
  • Business description
  • Executive summary
  • Development and design plan
  • Competitive analysis
  • Financial factors
  • Management and operations plan

Why the Nature of a Business Plan Matters

The nature of a business plan goes beyond being a collection of numbers and ideas. At its core, it demonstrates seriousness to lenders and investors, showing that the business is not only viable but also well-prepared for risks and opportunities. A strong plan highlights what makes the business unique, separates it from competitors, and reassures stakeholders of its potential for growth.

Equally important, the plan serves as an internal roadmap. It helps leaders stay on course when facing unexpected challenges or changing market conditions. For many businesses, success often depends on the strength and clarity of their initial plan.

How Long Should Your Business Plan Be?

A helpful business plan can be short or long, depending on the reason you're creating it. It can be anything from a scrawl on a piece of paper to a detailed plan that's over 100 pages long. The average business plan runs between 15 and 20 pages, but there's room for variation. If your concept is simple, you might be able to define it with only a few words. If you're talking about a new business or industry, you'll need a much lengthier explanation to describe what your idea is.

What your purpose is will also define how long your business plan is. If you want to get millions of dollars to start a venture that's risky, you'll need to do plenty of convincing and explaining. On the other hand, if you use your plan internally to govern ongoing business, you can easily have a more abbreviated version of the plan.

Strategic and Legal Considerations in Planning

The nature of a business plan also includes anticipating legal and compliance factors that can impact future growth. Incorporating legal considerations ensures that entrepreneurs protect their intellectual property, comply with state and federal laws, and structure contracts with employees, suppliers, and partners effectively.

Some areas to consider include:

  • Entity formation and structure (LLC, corporation, partnership) and its tax implications.
  • Intellectual property protection through trademarks, copyrights, or patents.
  • Employment agreements and policies to avoid disputes.
  • Compliance with industry regulations, licensing, or zoning requirements.

By addressing these issues in the business plan, founders can avoid costly disputes later and demonstrate long-term viability to investors.

Why Do Startups Need a Business Plan?

A traditional business plan writer is someone who considers themselves an entrepreneur and is looking for funds to start a new venture. Many successful companies originally started their plan on paper to convince investors they should put up capital to help them get started. There are many books on business planning that are aimed at the owners of startup businesses. This is because they're the least experienced and are likely the most appreciative of any help. However, small startups aren't the only companies that need a business plan.

Business Plans as Tools for Funding and Growth

For startups, the business plan is often the first serious step in turning an idea into a reality. Beyond describing products and services, the nature of a business plan provides tangible evidence of planning, risk management, and market understanding, which are essential when seeking investors or loans.

A well-prepared plan signals:

  • Commitment: The founders are serious about execution.
  • Preparedness: Risks and contingencies have been anticipated.
  • Profit potential: Revenue and cash-flow forecasts are realistic and measurable.

Without a structured plan, startups may struggle to communicate their value proposition, which can limit funding opportunities and delay growth.

Why Do Established Firms Need a Business Plan?

Not every business plan is written by an excited entrepreneur who is just starting their company. Many are written for and by companies that are well past the startup phase. For example, Walker Group/Designs was considered a well-established designer for large retailers. The founder thought of the idea of licensing and trademarking to apparel makers with the symbols 01-01-00. This was aimed at targeting the approaching millennium. Before the costly and difficult task of trademarking this around the world, the founder had a business plan that included sales forecasts. This was to convince larger retailers that it'd be smart to carry their 01-01-00 products.

Enterprises that are middle-stage might draft plans that help them get funding to grow their company similar to startups. However, they may be after larger amounts and looking for investors who will spend more. These enterprises feel it's necessary to have a written plan to manage their business that's already growing. This plan can be a helpful tool to get across their mission to potential suppliers, customers, and more.

Business Planning for Continuity and Succession

Established businesses also rely on planning to adapt to changes in the marketplace. The nature of a business plan here is less about proving viability and more about sustainability, expansion, and continuity.

For mature firms, plans may be used to:

  • Attract new investors or partners for growth.
  • Prepare for leadership transitions or succession.
  • Guide mergers, acquisitions, or expansions.
  • Secure financing for large-scale projects.

In some industries, a business plan also functions as a succession planning tool, ensuring that ownership transitions are smooth and that the company continues to thrive even if leadership changes. By blending operational strategies with succession goals, established companies can safeguard both immediate performance and long-term legacy.

Frequently Asked Questions

  1. What is meant by the “nature of a business plan”?
    It refers to the role a business plan plays as a strategic, financial, and legal tool that guides operations, secures funding, and reduces risks.
  2. How does the nature of a business plan differ for startups and established firms?
    Startups use plans to attract investors and prove viability, while established firms use them for scaling, succession planning, or adapting to market shifts.
  3. Why are legal considerations important in a business plan?
    They help ensure compliance, protect intellectual property, and clarify contracts, reducing future disputes and attracting investors.
  4. Can a business plan be too short?
    Yes—if it omits essential sections like market analysis or financial projections. However, a concise plan can work if the concept is simple and used internally.
  5. How often should a business plan be updated?
    At least annually, or whenever there are major changes in the market, leadership, or company goals, to keep the plan relevant and actionable.

If you need help with the nature of a business plan, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.