How to write an internal business plan

2023-07-21 11:46:33

One of the best uses for a business plan is as an internal management tool to help you run your business. Now, this doesn’t mean you should write a full business plan that you would traditionally use to seek funding or present to investors.

Instead, you can stick to a simple, easy-to-communicate internal business plan template.

What is an internal business plan?

An internal business plan keeps your team in sync with your business strategy, sets financial goals and budgets, and helps you track business performance so you can better manage your business. It is a document that can be easily distributed through multiple communication channels, encourages employee participation and helps uncover problems and competitive advantages for your business.

To simplify the planning process, use a growth planning method. This method focuses on creating a simpler and shorter business plan that is designed to function as an internal communication plan.

Growth plans are useful internal business planning tools because they are shorter, easier to update, and focus on succinctly describing business strategy and financial goals. Think of it as a longer, more robust executive summary that needs to be analyzed, updated, and referenced on a consistent basis.

What is the difference between an internal business plan and an external business plan?

An internal business plan is a tool created to make your business easier to manage. It is the most effective business plan for internal analysis and should be the focus of regular strategy sessions. The internal business plan is also often used to quickly explore new business ideas and determine if they are viable.

The audience for an internal business plan is usually your business partners and employees. It is generally not shared beyond the close circle of people who are involved in your business on a day-to-day basis. With the limited audience and the focus on business strategy and management, the internal business plan is often less formal. It does not include much of what is included in an external business plan.

The external business plan, on the other hand, is used to introduce your business to people outside of your organization. It is typically part of the fundraising process and is used to communicate your business strategies and team to investors. The external business plan is also used when you buy or sell a business.

Due to the focus on informing outsiders about your business, the external business plan typically includes more detailed information about the team behind the business, business history, and milestones that have been achieved. The format is also more formal and usually a bit longer than an internal business plan.

What is the purpose of an internal business plan?

Within your business, an internal business plan is used to define your business strategy, define who your ideal customers are, outline a more detailed marketing plan, and set your revenue goals and expense budgets.

The business plan is often associated with fundraising and startups, but creating a simple internal business plan is invaluable to businesses because:

Define the business strategy. A solid business strategy is key to a successful business. Defining your strategy also helps you stay focused as you grow. Opportunities are always presenting themselves and as a business owner you need to know what your strategy is and determine if an opportunity fits your strategy or not. There are also times when you may need to change your strategy, but this must be done carefully. With a defined business strategy, you’ll have the guidance you need to steer your business in the right direction.
Bring everyone up to date. Especially as your team grows, it’s important that everyone works towards the same goal. It can be easy for different people to have different visions of where your business is headed. These different visions can make your business less efficient as people work to achieve disparate goals. A good internal business plan keeps everyone on the same page and can foster more consistent and valuable communication among employees. In many ways, it should be the document that helps define your internal communications strategy and even the culture of your company. After all, if you have a clear vision that you can easily convey, it will be easier to commit to and grow your business.
It focuses on forecasts and performance. One of the most important management tools at your disposal is a budget and forecast. An internal business plan should always include a forecast that sets revenue targets for your business, as well as budgets to guide spending. These forecasts and budgets should be reviewed regularly, at least monthly, and refined on the fly based on how your business is performing.
How to write an internal business plan. Internal business plans are simple and straightforward. Get rid of long paragraphs and long explanations and instead focus on simple bulleted lists and short sentences. Remember, the plan is for you, so make it a tool that you will use and update regularly. Long documents are rarely updated, while simple one-page business plans are easy to keep up-to-date and easy to use.

What should you include in your internal business plan?

Value proposal. This is a one sentence summary of your business. What value do you provide and to whom do you provide it? You can use this section to share your mission statement – ​​it’s a reminder to your team about the overall purpose of your business.

The problem and its solution. It’s often easy to describe the products and services you offer. However, the most important part of this section is defining the problem that you will solve for your customers. A solid definition of the problems you help your clients solve will keep you focused as you explore new revenue opportunities.

Target market and competition. Just as important as defining your customers’ problems is defining who your target customers are. This helps ensure that marketing campaigns are focused and that your team knows who they are trying to reach. You should also keep track of alternatives your customers might consider and why they might choose a competitor over you.

Sales channels and marketing activities. Your internal business plan should define how you sell your products and services and what marketing channels you will use to reach your customers. If you’re expanding into new markets, your internal business plan can help guide that activity.

Financial projections. At the very least, you should forecast sales and set expense budgets to guide your team. Beyond that, cash flow forecasts provide crucial information about whether and when you should consider raising additional funds or opening a line of credit to support business growth.

Milestones. Milestones define key goals and objectives for your team. It is not about setting daily tasks, but about setting some key goals for the coming months. You’ll keep your team focused on the most important goals by setting milestones.

Your team. If your team is not growing, you can skip this section for internal business planning. But, if a key part of your business strategy is hiring and adding important team members, identify your team’s key growth areas.

More information