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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, 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.

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A business plan is a document that outlines a company's goals and the strategies to achieve them. It's valuable for both startups and established companies. For startups, a well-crafted business plan is crucial for attracting potential lenders and investors. Established businesses use business plans to stay on track and aligned with their growth objectives. This article will explain the key components of an effective business plan and guidance on how to write one.

Key Takeaways

• A business plan is a document detailing a company's business activities and strategies for achieving its goals.
• Startup companies use business plans to launch their venture and to attract outside investors.
• For established companies, a business plan helps keep the executive team focused on short- and long-term objectives.
• There's no single required format for a business plan, but certain key elements are essential for most companies.

Investopedia / Ryan Oakley

Any new business should have a business plan in place before beginning operations. Banks and venture capital firms often want to see a business plan before considering making a loan or providing capital to new businesses.

Even if a company doesn't need additional funding, having a business plan helps it stay focused on its goals. Research from the University of Oregon shows that businesses with a plan are significantly more likely to secure funding than those without one. Moreover, companies with a business plan grow 30% faster than those that don't plan. According to a Harvard Business Review article, entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don't.

A business plan should ideally be reviewed and updated periodically to reflect achieved goals or changes in direction. An established business moving in a new direction might even create an entirely new plan.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. It allows for careful consideration of ideas before significant investment, highlights potential obstacles to success, and provides a tool for seeking objective feedback from trusted outsiders. A business plan may also help ensure that a company’s executive team remains aligned on strategic action items and priorities.

While business plans vary widely, even among competitors in the same industry, they often share basic elements detailed below.

A well-crafted business plan is essential for attracting investors and guiding a company's strategic growth. It should address market needs and investor requirements and provide clear financial projections.

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, gathering the basic information into a 15- to 25-page document is best. Any additional crucial elements, such as patent applications, can be referenced in the main document and included as appendices.

Common elements in many business plans include:

• 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 : Describe the products and services the company offers or plans to introduce. Include details on pricing, product lifespan, and unique consumer benefits. Mention production and manufacturing processes, relevant patents , proprietary technology , and research and development (R&D) information.
• Market analysis : Explain the current state of the industry and the competition. Detail where the company fits in, the types of customers it plans to target, and how it plans to capture market share from competitors.
• Marketing strategy : Outline the company's plans to attract and retain customers, including anticipated advertising and marketing campaigns. Describe the distribution channels that will be used to deliver products or services to consumers.
• Financial plans and projections : Established businesses should include financial statements, balance sheets, and other relevant financial information. New businesses should provide financial targets and estimates for the first few years. This section may also include any funding requests.

Investors want to see a clear exit strategy, expected returns, and a timeline for cashing out. It's likely a good idea to provide five-year profitability forecasts and realistic financial estimates.

2 Types of Business Plans

Business plans can vary in format, often categorized into traditional and lean startup plans. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These are detailed and lengthy, requiring more effort to create but offering comprehensive information that can be persuasive to potential investors.
• Lean startup business plans : These are concise, sometimes just one page, and focus on key elements. While they save time, companies should be ready to provide additional details if requested by investors or lenders.

Why Do Business Plans Fail?

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

How Often Should a Business Plan Be Updated?

How frequently a business plan needs to be revised will depend on its nature. Updating your business plan is crucial due to changes in external factors (market trends, competition, and regulations) and internal developments (like employee growth and new products). While 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 ideal for quickly explaining a business, especially for new companies that don't have much information yet. Key sections may include a value proposition , major activities and advantages, resources (staff, intellectual property, and capital), partnerships, customer segments, and revenue sources.

A well-crafted business plan is crucial for any company, whether it's a startup looking for investment or an established business wanting to stay on course. It outlines goals and strategies, boosting a company's chances of securing funding and achieving growth.

As your business and the market change, update your business plan regularly. This keeps it relevant and aligned with your current goals and conditions. Think of your business plan as a living document that evolves with your company, not something carved in stone.

University of Oregon Department of Economics. " Evaluation of the Effectiveness of Business Planning Using Palo Alto's Business Plan Pro ." Eason Ding & Tim Hursey.

Bplans. " Do You Need a Business Plan? Scientific Research Says Yes ."

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

Harvard Business Review. " How to Write a Winning Business Plan ."

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

SCORE. " When and Why Should You Review Your Business Plan? "

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

Published: June 28, 2024

Years ago, I had an idea to launch a line of region-specific board games. I knew there was a market for games that celebrated local culture and heritage. I was so excited about the concept and couldn't wait to get started.

But my idea never took off. Why? Because I didn‘t have a plan. I lacked direction, missed opportunities, and ultimately, the venture never got off the ground.

And that’s exactly why a business plan is important. It cements your vision, gives you clarity, and outlines your next step.

In this post, I‘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.

Table of Contents

What is a business plan?

What is a business plan used for.

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Purposes of a Business Plan

What does a business plan need to include, types of business plans.

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A business plan is a comprehensive document that outlines a company's goals, strategies, and financial projections. It provides a detailed description of the business, including its products or services, target market, competitive landscape, and marketing and sales strategies. The plan also includes a financial section that forecasts revenue, expenses, and cash flow, as well as a funding request if the business is seeking investment.

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.

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.

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How to Write a Business Plan, Step by Step

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What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

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A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

Business Plan Example and Template

Learn how to create a business plan

What is a Business Plan?

A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing .

A business plan should follow a standard format and contain all the important business plan elements. Typically, it should present whatever information an investor or financial institution expects to see before providing financing to a business.

Contents of a Business Plan

A business plan should be structured in a way that it contains all the important information that investors are looking for. Here are the main sections of a business plan:

1. Title Page

The title page captures the legal information of the business, which includes the registered business name, physical address, phone number, email address, date, and the company logo.

2. Executive Summary

The executive summary is the most important section because it is the first section that investors and bankers see when they open the business plan. It provides a summary of the entire business plan. It should be written last to ensure that you don’t leave any details out. It must be short and to the point, and it should capture the reader’s attention. The executive summary should not exceed two pages.

3. Industry Overview

The industry overview section provides information about the specific industry that the business operates in. Some of the information provided in this section includes major competitors, industry trends, and estimated revenues. It also shows the company’s position in the industry and how it will compete in the market against other major players.

4. Market Analysis and Competition

The market analysis section details the target market for the company’s product offerings. This section confirms that the company understands the market and that it has already analyzed the existing market to determine that there is adequate demand to support its proposed business model.

Market analysis includes information about the target market’s demographics , geographical location, consumer behavior, and market needs. The company can present numbers and sources to give an overview of the target market size.

A business can choose to consolidate the market analysis and competition analysis into one section or present them as two separate sections.

5. Sales and Marketing Plan

The sales and marketing plan details how the company plans to sell its products to the target market. It attempts to present the business’s unique selling proposition and the channels it will use to sell its goods and services. It details the company’s advertising and promotion activities, pricing strategy, sales and distribution methods, and after-sales support.

6. Management Plan

The management plan provides an outline of the company’s legal structure, its management team, and internal and external human resource requirements. It should list the number of employees that will be needed and the remuneration to be paid to each of the employees.

Any external professionals, such as lawyers, valuers, architects, and consultants, that the company will need should also be included. If the company intends to use the business plan to source funding from investors, it should list the members of the executive team, as well as the members of the advisory board.

7. Operating Plan

The operating plan provides an overview of the company’s physical requirements, such as office space, machinery, labor, supplies, and inventory . For a business that requires custom warehouses and specialized equipment, the operating plan will be more detailed, as compared to, say, a home-based consulting business. If the business plan is for a manufacturing company, it will include information on raw material requirements and the supply chain.

8. Financial Plan

The financial plan is an important section that will often determine whether the business will obtain required financing from financial institutions, investors, or venture capitalists. It should demonstrate that the proposed business is viable and will return enough revenues to be able to meet its financial obligations. Some of the information contained in the financial plan includes a projected income statement , balance sheet, and cash flow.

9. Appendices and Exhibits

The appendices and exhibits part is the last section of a business plan. It includes any additional information that banks and investors may be interested in or that adds credibility to the business. Some of the information that may be included in the appendices section includes office/building plans, detailed market research , products/services offering information, marketing brochures, and credit histories of the promoters.

Business Plan Template

Here is a basic template that any business can use when developing its business plan:

Section 1: Executive Summary

• Present the company’s mission.
• Describe the company’s product and/or service offerings.
• Give a summary of the target market and its demographics.
• Summarize the industry competition and how the company will capture a share of the available market.
• Give a summary of the operational plan, such as inventory, office and labor, and equipment requirements.

Section 2: Industry Overview

• Describe the company’s position in the industry.
• Describe the existing competition and the major players in the industry.
• Provide information about the industry that the business will operate in, estimated revenues, industry trends, government influences, as well as the demographics of the target market.

Section 3: Market Analysis and Competition

• Define your target market, their needs, and their geographical location.
• Describe the size of the market, the units of the company’s products that potential customers may buy, and the market changes that may occur due to overall economic changes.
• Give an overview of the estimated sales volume vis-à-vis what competitors sell.
• Give a plan on how the company plans to combat the existing competition to gain and retain market share.

Section 4: Sales and Marketing Plan

• Describe the products that the company will offer for sale and its unique selling proposition.
• List the different advertising platforms that the business will use to get its message to customers.
• Describe how the business plans to price its products in a way that allows it to make a profit.
• Give details on how the company’s products will be distributed to the target market and the shipping method.

Section 5: Management Plan

• Describe the organizational structure of the company.
• List the owners of the company and their ownership percentages.
• List the key executives, their roles, and remuneration.
• List any internal and external professionals that the company plans to hire, and how they will be compensated.
• Include a list of the members of the advisory board, if available.

Section 6: Operating Plan

• Describe the location of the business, including office and warehouse requirements.
• Describe the labor requirement of the company. Outline the number of staff that the company needs, their roles, skills training needed, and employee tenures (full-time or part-time).
• Describe the manufacturing process, and the time it will take to produce one unit of a product.
• Describe the equipment and machinery requirements, and if the company will lease or purchase equipment and machinery, and the related costs that the company estimates it will incur.
• Provide a list of raw material requirements, how they will be sourced, and the main suppliers that will supply the required inputs.

Section 7: Financial Plan

• Describe the financial projections of the company, by including the projected income statement, projected cash flow statement, and the balance sheet projection.

Section 8: Appendices and Exhibits

• Quotes of building and machinery leases
• Proposed office and warehouse plan
• Market research and a summary of the target market
• Credit information of the owners
• List of product and/or services

Related Readings

Thank you for reading CFI’s guide to Business Plans. To keep learning and advancing your career, the following CFI resources will be helpful:

• Corporate Structure
• Three Financial Statements
• Business Model Canvas Examples
• See all management & strategy resources
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Table of Contents

What is business analysis, analyzing a business: why, factors to consider while analyzing a business, what’s the process involved in analyzing a business, do you want to become a business analyst, analyzing a business: the important aspects for a business analyst.

It’s tough running a successful business. There’s a ton of competition and a constant stream of new technologies available to you and your competitors to chart and navigate the ever-changing seas.  

If a business wants to thrive today, it must leverage every possible advantage it can find. While this boring fact is not all that new, technology is changing in new ways — and at warp speed. That’s why business analysis is essential for success, and why professionals adept at analyzing a business strategy and plan are in super-high demand. This article explores the concept of business analysis and why analyzing a business is critical for success. We’ll explore the processes and aspects that matter most to business analysts .

Business analysis is the practice, or discipline, of identifying and creating solutions for business needs. Business analysis helps people understand how their respective company functions to fulfill its primary purpose.

By analyzing a business plan or strategy, you can pinpoint areas that need change and introduce those changes to your team members and the stakeholders in your organization. Solutions will range from organizational changes and strategic planning to process improvement and software systems development.

A business analyst is a professional responsible for analyzing a business and guiding it through the improvement process. They begin by analyzing the business environment, including its systems, processes, and assessing its business model. Once the analysts complete their research, they use data analysis tools and other techniques to shepherd the business by improving products, processes, and services.

We can keep saying that businesses these days are faced with more tremendous obstacles, but that’s not helping matters unless we can specifically show why a company needs to conduct a business analysis. Let’s look at why companies need to be doing this regularly.

1. Figuring Out the Company’s Performance

Analysts conduct a business portfolio analysis to look at its services and products and categorize them based on their performance and competitiveness.

2. Getting an Account of the Company’s Resources and Goals

A thorough business analysis imparts an understanding of a company’s operations, structure, policies, and goals. Armed with this information, business analysts can recommend which solutions are needed to achieve those goals and figure out what resources and tools they need to achieve them.

3. Facilitating Digital Transformation

Digital transformation is the new black, especially considering elements such as data analytics and information management. Simply put, analyzing a business through data-driven stats is the only way to succeed today.

4. Incentivizing Change

It’s one thing to create a business project meant to provide solutions to a company’s most pressing issues. It’s another to get the staff to go along with the changes. A successful business analysis coupled with transparency gives proof to a skeptical staff about why the changes are a positive step.

The fact is, analyzing a business will help organizations determine how their products and services are performing versus the competition, measure digital transformation progress, and provide evidence to the staff and stakeholders to convince them to adopt the recommended solutions. 

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So if a business is at the point where it recognizes the value of business analysis , the next question is, “What factors weigh into analyzing a business?” The key is to make sure the analysis focuses on details that matter and make a difference.

Here are some key factors that show up in the most successful business analysis examples.

1. Customer Research

Let’s begin with the most essential factor, the customers! After all, if a business doesn’t have customers, it won’t remain around for long. Customer research includes feedback such as surveys (mail, internet, phone, in-person), customer service interactions (often by a chatbot), and online reviews. Analysts use this research to figure out what customers want out of the product, even down to details such as preferred sizes and colors. Accurate customer research, culled by business analysts, is an invaluable tool for determining a company’s future product releases.

2. Product Quality

Covering everything from product testing to quality control and safety checks to benchmarking, product quality and benchmarking is paramount. Benchmarking involves companies constantly measuring their products against similar items produced by competitors. A sound analysis paints a good picture of how the market sees the company’s product value, longevity, and quality.

3. Labor Costs

Employee costs account for the largest piece of most business' budgets, so companies should conduct a thorough analysis of wages and how they line up with the bank. Analysts also need to factor in what the competition is paying their employees as many businesses won’t hesitate to pay (and poach) for qualified, valuable employees. Analyzing a business’ labor costs is often like walking a tightrope between staying within budget and paying a competitive salary. Still, it's worth it in the long run.

4. Success in Meeting Goals

Lots of businesses talk a good game, but talk is cheap. A thorough, unbiased business analysis measures how well the company delivers what it promises, meets its goals, and lives up to the hype. The research focuses on revenue growth and accounts receivable turnover to put together a clear picture that jibes with the quality and reliability of the products and services that are being delivered.

5. Financial Analysis

This ties in with the previous point. But whereas measuring the company’s success at meeting its goals as a “make or break” proposition, a thorough business analysis compares daily, weekly, and monthly sales figures and compares them to sales forecasts during peak shopping seasons, variables such as the global pandemic, natural disasters, changing demographics, and so on. Advice: always be prepared for anything that comes your way.

6. What’s the Competition Up To?

While a business struggles to win the race against ever-changing technology, market uncertainties, and crippling pandemics, it can’t lose sight of the competition. Is the company in question keeping up, passing, or falling behind their rivals, and if the latter is true, what can they do to change the narrative?

7. Company Size and Growth

Companies that grow too quickly often run into pitfalls. Is this business growing too fast and reckless? Because if so, it’s likely to experience shrinkage as the market self-corrects. Additionally, management often struggles with over-confidence and finds it difficult to switch their approach to an even-growth model.

8. Trend Analysis

Game-changing technologies and new business models are popping up like crazy in today’s hyperconnected world. If you’re analyzing a business well, you must be keeping up on the trends. If the competition is doing a better job of adapting to industry changes, they will come out ahead. By leveraging the latest analytics tools, you can stay competitive.

Now that we've ascertained how vital business analysis can be for a company's future and what factors we need to consider, the final step is figuring out the process. That’s called the business process analysis, broken down into the following steps:

1. Identify All Relevant Processes

Analysts must ascertain which processes need improvement and focus attention only on them. Once you identify the necessary processes, you can start putting together goals. Here are some questions that help identify these processes:

• What’s our company’s mission?
• Who are our clients?
• What’s important to our customers?
• What are our Key Performance Indicators (KPI)?
• What’s the plan?

2. Put Together an A-Team

This team consists of people who will help carry out the business analysis — ideally leveraging the members who are already familiar with the daily processes, while always recruiting new talent. The team needs people who understand business process management (BPM), can take on leadership roles, and motivate employees to effect necessary changes swiftly. 

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3. Create a Business Process Diagram or Flowchart

Analysts who draw up a step-by-step diagram help people to visualize the process and can facilitate better business outcomes. The chart should include:

• Who is responsible for each process
• Events that initiate the processes
• Tasks and their relationships
• Determine how a process ends and how to mark its end

4. Define the Process as It Now Stands

The analyst defines how the process is currently taking place.

5. Call Out Improvement Points

Analysts figure out the necessary improvements, and if they’re possible, make sure that they fit with the company’s overall goals. Potential improvement points include:

• Addressing bottlenecks and obstacles
• Increasing customer interaction
• Decreasing task and information handoffs between people and systems
• Bolstering the value to the customer
• Continuously defining business standards, rules, and procedures

6. Creating Better Processes

Here is where the analysts take all the above information and model the new process, aligning it with data-driven and informed objectives and goals.

Business analysts are a precious resource in today’s high-pressure environments. If you would like a business analysis career, Simplilearn is ready to provide you with the tools to make your dreams come true. The Business Analytics for Strategic Decision Making with IIT Roorkee  helps you master critical business analysis techniques, Agile Scrum methodologies, SQL databases, and visualization tools like Excel, Power BI, and Tableau.

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Business Analysis: How To Analyze Any Business

Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.

Table of Contents

A quick intro to the Business Analysis Framework

On FourWeekMBA, I’ve looked at hundreds of business models of companies from high-tech industries ( Alphabet’s Google , Amazon , Facebook , Apple , and Microsoft ) to more traditional industries, like luxury empires ( LVMH , Kering Group , Tiffany , Brunello Cucinelli , Prada ) and more.

I’ve analyzed from listed public companies, for which data can be found in financial statements, to small businesses for which data is not publicly available.

As I received this question repeatedly, I thought to show a simple framework to analyze any business.

For the sake of this framework, we’ll leverage business analysis to reverse engineer a business to either help it grow or to gather insights that can help us grow our own company.

Keep in mind that business analysis requires a good amount of creativity.

While a single framework is a good starting point, you will need to use your experience, understanding of the industry, and what is available out there to draw a picture of what you’re looking at.

In short, I think a practical approach to business analysis is that of the artist rather than the scientist.

Thus, while we’ll be using a few data points to understand a business, we want to keep our minds able to connect the dots in several areas to draw a picture that unlocks strategic insights that we can test.

To provide a framework as a starting point to analyze any sort of business, you’ll need to answer a few simple questions, each addressing a key element of the business.

We’ll tackle it by looking at three main competitive advantages a business can create over time:

• What’s the key asset? (core asset)

Market moat :

• Who’s the key stakeholder? (stakeholder profiling)
• What player is competing for the same customer? (context mapping)
• What’s the key touchpoint between the brand and the customer? (core distribution )

Financial moat:

• How does it make money? (revenue generation)
• Where’s the real cash? (cash generation)
• How does the company spend money? (cost structure)

Let’s analyze each of those elements to uncover and draw the picture of any business. We’ll start from the outer layer (the financial moat, to get to the core asset.

Financial moat

In the. financial moat stage we’ll answer:

The purpose of the financial moat is to follow the money to dig deeper into the business and move toward what gives it a real market advantage, and eventually, we’ll look for the business core asset.

How does it make money?

Revenue streams are important as a baseline to understand any business.

Following the money can be very powerful in business as it unlocks a set of questions that will help us drill down into the current picture but also to draw some possible conclusions about future operations and strategy .

For instance, if you look at Google revenue streams it’s interesting to notice a few things right away:

• The company still primarily makes money from advertising
• Google revenue streams are diversified (even though advertising is still the primary revenue stream)
• A very small percentage of Google’s revenues come from other bets

From those simple statements, we can drill further down and look at each revenue stream:

• Advertising revenues: Google makes money by two primary mechanisms: Google Ads and Google AdSense
• Other revenues: that comprises things like in-app revenues, but also hardware devices which Google sells
• Other bets: it comprises investments in other ventures

From this first look, we can depart from looking at other bets and other revenues. Not because those are not important for the future. Quite the opposite, one of the hidden gems of Google’s success in the next ten, twenty years might hide there.

But here we’re not trying to predict the future, which is impossible.

We want to reverse engineer the current business to gather some insights which will help us drive our own strategy now (for instance, if you’re building a business today by gaining organic traffic from Google understanding its logic helps a lot!).

Therefore, we’ll decide to drill down more

Why? We want to uncover where the real cash is.

Where’s the real cash?

When asking “where’s the real cash?” we’re not talking about cash flows, but rather about margins. In short, for companies like Netflix which run cash negative business models , it would be misleading to ask where’s the cash.

Instead, we want to look at the part of the business that has high-profit margins. For instance, if we look at Google’s advertising machine we can notice a few things:

To build a cash cow the company might do the following:

• Give up part of the margins on a line of business to strengthen another more strategic and scalable part of the business ( think of how Google splits revenues with network members thus giving up a good chunk of margins, yet by making its search pages way more valuable for users, and advertisers)
• Build a freemium part of the business which while doesn’t get monetized it helps amplify the brand and to build a valuable core asset monetized asymmetrically (we’ll see what that means)

How does the company spend money?

How the company spends its money informs about how it’s investing back into strengthening its core asset, thus building future growth .

Market moat

At this stage, we’ll ask:

The objective here is to understand what creates a competitive market advantage and point us toward the core asset of the company, which makes the business sustainable in the long-term.

Who’s the key stakeholder?

If you look at a companies’ like Amazon the complexity of the business goes well beyond a regular company.

In short, at this stage, it’s important to highlight the difference between small businesses which are more linear in how they approach customers.

And platform business models that instead have a more complex value chain.

We could make this process harder and harder by finding more business types, and classifying them into B2B, B2C, B2B2C, and more.

Or we can take a more straightforward approach.

Who’s the key user/customer, and what’s the value provided to her?

In Amazon’s case, for instance, the company has multiple products and each of them has a different value proposition .

Therefore, focusing on them all would be a mistake, as we want to go back and reconsider.

Who’s the Amazon repeat customer?

The customer who goes back to the Amazon e-commerce platform to buy over and over again is the key customer and where the company has built its success.

When you do look at the customer from that perspective, you stop assuming that Amazon Prime is another revenue stream . Instead, you understand that besides that, that is a way for Amazon to lock-in loyal customers and make their repeat purchases convenient (Prime Customers won’t pay for delivery).

The same happens if you go back and ask a similar question for a company like Google.

Who’s the person that drives up the value of the most important company’s asset?

If you look at Google’s business model , it’s easy to get fooled:

You might assume that as Google makes money by selling advertising to businesses, it will be the advertiser who pays Google to be the most valuable customer.

Yet, in Google’s case, the most valuable customer is the one who doesn’t pay: its users

That is because Google runs an asymmetric model .

In short, the company won’t monetize directly its users, but it will monetize the core asset which is built on top of the free users’ attention.

Where free users provide valuable data to Google’s algorithms, the company matches its technology with the users’ data and sells part of that as paid adverting.

In short, in an asymmetric model user and customers are not the same.

In a more symmetric model instead, users and customers are the same stakeholders.

The customer wearing the hat of the user provides valuable data to the platform. The company refines that data through proprietary algorithms and as a result, it gives back a valuable service to its customers.

That is how the Netflix business model works.

In those cases when the user is what provides valuable data to the core asset of the company, it’s important to understand that the tech company will prioritize its strategy around the user over time.

What player is competing for the same customer?

Once found the key stakeholder, the person who helps the company build its most valuable asset, we can zoom out a bit and understand the context in which the company operates.

One way to find comparable companies to map out the context is to look for those organizations that match the business and financial profile.

We do that because there is no company operating in a vacuum.

And even when a company that is better suited to help customers get things done might dominate.

In many other circumstances, better distribution strategy , capital moats, and more effective business models can help companies dominate beyond the value provided by their core products.

That’s why context matters.

In Google’s case we’ll look at the other players which are also grabbing the attention of users around the globe:

An attention-based model usually follows an asymmetric monetization strategy . Therefore, given Google’s key stakeholders (its users), and the fact that it’s an attention-based model, we can understand right away what products/platforms in the marketplace are comparable:

• Google (Alphabet)
• YouTube (Alphabet)
• Instagram (Facebook)
• Bing (Microsoft)
• TikTok (ByteDance)

Therefore, in order for Google to keep its competitive advantage is important to keep an eye on these.

* Note : The reason why Amazon is on the list as its website is one of the most important product search engines, intercepting the commercial intents of billions of people in the western world.

What’s the key touchpoint between the brand and the customer?

While disruptive startups built their name and grabbed market shares quickly by breaking down the trade-off between value and cost (at the basis of a blue ocean strategy ) there is another component of the success of any organization which can’t be ignored: distribution .

Distribution is the key touchpoint that makes customers connect with a brand , that enables companies to monetize their core assets and that enables them to keep tight long-term control over their business.

The importance of a distribution strategy can’t be overstated. Distribution isn’t just about delivering a product in the hands of the key customer that is also about:

• Enabling the company to be perceived inline with its pricing strategy and the brand ’s identity
• Building up the habits that enable users/customers to become champion of the product (just like you can’t stop using Google)
• Build competitive moats

Finally, at this stage, we can identify the core asset and put all together.

What’s the key asset?

The key asset is the main property that enables the company to make money in the long run.

For a tech business like Google, which is represented by its search results pages endowed by users’ data and algorithms, makes them extremely valuable to advertisers.

If we think of a smaller business or a non-tech company that can be represented by its premises or its brand .

For instance, a small Boutique hotel’s location is the key asset. For a luxury company, its brand is the most important asset.

The former is physical and easily identifiable.

The latter is instead non-physical and abstract, yet still extremely valuable as it enables companies like Prada, LVMH, Tiffany and other luxury brands to capture high margins.

Therefore depending on the company, the main asset might be the technology, data or brand . Or better yet a mixture of those things.

Putting it all together

As we identified the core asset, market, and financial moat, we can move backward to uncover the whole story.

In a case like Google, the company makes its money primarily by monetizing its search results pages (core asset).

It runs an asymmetric business model where the user and the customer are not the same (stakeholder profiling). Products and platforms like Amazon, Facebook and Twitter also draw the attention of users (context mapping), however, Google has a strong distribution network given for instance by the fact the company can cover the whole users’ journey (core distribution ), and most of its money is spent to maintain its core asset competitive (cost structure), while advertisers provide revenues and cash to the company which makes it financially sustainable (financial moat).

Where do you find the data?

A set of useful resources to find the data you need to analyze several businesses are:

• EDGAR Filings

It’s important to remark that when it comes to data it’s not important how many data points you find. Often it requires a bit of creativity to ponder the right question.

In that case, a single data point can tell you a lot about a business that you can use to assess the company or to drive the strategy for your own business.

FourWeekMBA business analysis framework summarized

To analyze any business, you can ask a few simple questions:

Each of those questions will lead to an understanding of the several blocks that make up internal and external strategic forces that shape the business.

Case study: how to make an everyday free tool your go to BI alternative

While it’s tempting to complex things up when performing business analysis, in reality, there is a simple tool, that you have been using for years, which can help you to perform a good part of your analysis: Google.

As pointed out on the Google blog in 2012:

Search is a lot about discovery—the basic human need to learn and broaden your horizons. But searching still requires a lot of hard work by you, the user. So today I’m really excited to launch the Knowledge Graph, which will help you discover new information quickly and easily. …The Knowledge Graph enables you to search for things, people or places that Google knows about—landmarks, celebrities, cities, sports teams, buildings, geographical features, movies, celestial objects, works of art and more—and instantly get information that’s relevant to your query. This is a critical first step towards building the next generation of search, which taps into the collective intelligence of the web and understands the world a bit more like people do. …the Knowledge Graph can help you make some unexpected discoveries. You might learn a new fact or new connection that prompts a whole new line of inquiry. Do you know where Matt Groening, the creator of the Simpsons (one of my all-time favorite shows), got the idea for Homer, Marge and Lisa’s names? It’s a bit of a surprise:

In 2012, Google started to roll out officially its Knowledge Graph (though its attempt to make the search experience even smarter and more semantic started way back and it escalated when the company acquired MetaWeb).

With that, Google started do develop more and more features related to giving beyond the classic ten blue links we have seen for years.

Those features we see appearing more and more on search results are coming from the massive Google’s semantic database made of billions of data points called Knowledge Graph.

Within the Knowledge Graph, Google combined semantic knowledge, to billions of users’ preferences and data, refined by its powerful algorithms and refined by its human raters.

This massive knowledge base is there to be explored, for free, it only requires you to be aware of it.

Industry analysis and setup

When searching for “Amazon” on Google, at the bottom of the page (from desktop) you will find several suggestions from Google, based on the industries where Amazon operates.

In short, Google is suggesting that Amazon primarily operates as an online retailer, and as such it compares it with other retailers (online and offline). Yet Google’s Knowledge Graph also expands on that and tells you more.

Amazon is also an AI company competing against other AI companies which offers you an interesting insight into the products of the company.

At the same time, Google is suggesting that Amazon is also a key player in the cloud space, thus it offers you some perspectives of how the cloud industry looks like by pointing out some direct competitors (like Microsoft and Oracle) and other companies operating in the cloud space.

Expand the research

From there, you can drill down into each of the carousels you see showing on Google to have a more detailed overview and expand the research. You can stretch it as far as you want, depending on the scope of the analysis.

Discover new data points

As an example, when you drill further down and search for “cloud companies” at the bottom of the search result page, you will find other categories of companies part of the cloud industry.

From PaaS to IaaS models, all were born as part of the cloud industry.

Key takeaway

While it’s easy to look for the ultimate business intelligence tools when performing an analysis, in reality, it makes sense to stop for a second and think about what might be the single data points that can give you insights about a company.

From there, you can use explorative tools, like Google to find out and drill down to draft an analysis that can give you different insights and enable you to reverse engineer many large companies.

Key Highlights

• The framework aims to analyze businesses for growth opportunities and strategic insights.
• It involves three main competitive advantages: Core moat, Market moat, and Financial moat.
• Identifying the key asset that gives the company a competitive advantage.
• Understanding the main value proposition of the business.
• Recognizing the key stakeholders and their value in the business.
• Identifying competing players in the same customer segment.
• Understanding the crucial touchpoints between the brand and customers.
• Analyzing revenue generation methods of the business.
• Identifying where the significant cash flows come from.
• Understanding the cost structure and how the company spends money.
• Distinguishing between users and customers in the business model.
• Highlighting the importance of leveraging data and technology.
• Using Google’s Knowledge Graph for insights and research.
• Expanding analysis by exploring suggested entities and categories.
• Discovering new data points to enhance the analysis.
• Focusing on single data points that offer valuable insights.
• Using explorative tools like Google to gather insights about a company.
• Emphasizing the importance of creative analysis and critical questions.
• The framework provides a structured approach to understanding various aspects of a business.
• It aids in identifying growth opportunities, competitive advantages, and strategic insights.
• The use of Google’s Knowledge Graph enhances research capabilities.

Connected Analysis Frameworks

Failure Mode And Effects Analysis

Agile Business Analysis

Business Valuation

Paired Comparison Analysis

Monte Carlo Analysis

Cost-Benefit Analysis

CATWOE Analysis

VTDF Framework

Pareto Analysis

Comparable Analysis

SWOT Analysis

PESTEL Analysis

Business Analysis

Financial Structure

Financial Modeling

Value Investing

Buffet Indicator

Financial Analysis

Post-Mortem Analysis

Retrospective Analysis

Root Cause Analysis

Blindspot Analysis

Break-even Analysis

Decision Analysis

DESTEP Analysis

STEEP Analysis

STEEPLE Analysis

Activity-Based Management

PMESII-PT Analysis

SPACE Analysis

Lotus Diagram

Functional Decomposition

Multi-Criteria Analysis

Stakeholder Analysis

Strategic Analysis

Related Strategy Concepts:  Go-To-Market Strategy ,  Marketing Strategy ,  Business Models ,  Tech Business Models ,  Jobs-To-Be Done ,  Design Thinking ,  Lean Startup Canvas ,  Value Chain ,  Value Proposition Canvas ,  Balanced Scorecard ,  Business Model Canvas ,  SWOT Analysis ,  Growth Hacking ,  Bundling ,  Unbundling ,  Bootstrapping ,  Venture Capital ,  Porter’s Five Forces ,  Porter’s Generic Strategies ,  Porter’s Five Forces ,  PESTEL Analysis ,  SWOT ,  Porter’s Diamond Model ,  Ansoff ,  Technology Adoption Curve ,  TOWS ,  SOAR ,  Balanced Scorecard ,  OKR ,  Agile Methodology ,  Value Proposition ,  VTDF Framework ,  BCG Matrix ,  GE McKinsey Matrix ,  Kotter’s 8-Step Change Model .

Main Guides:

• Business Models
• Business Strategy
• Marketing Strategy
• Business Model Innovation
• Platform Business Models
• Network Effects In A Nutshell
• Digital Business Models

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Gennaro Cuofano

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12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

• The name and location of your company
• Products and services offered by your company
• Mission and vision statements
• Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

• Business location
• The legal structure of your business
• Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

• The geographical location of your target market
• Needs of your target market and how your products and services can meet those needs
• Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

• Industry description and statistics
• Demographics and profile of target customers
• Marketing data for your products and services
• Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

• Your competitors' identified advantages in the market
• How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
• The standout qualities that distinguish you from other companies
• Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

• Information about how your company plans to carry out its operations.
• The base location from which your company intends to operate.
• The number of employees to be utilized and other information about your company's operations.
• Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

• Projected income statements
• Cash flow statements
• Balance sheets
• Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

• Legal documents
• Licenses and permits
• Credit histories
• Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

• The management team and other stakeholders resume
• Marketing research
• Permits and relevant legal documents
• Financial documents

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Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

Strategic Analysis: What It Is & How To Do It Effectively

Are you confusing strategic analysis with one of these other business functions?

Unlike strategic planning and strategy execution, strategic analysis can be a fuzzy term. Sometimes it’s confused with the tracking and analysis of operational data points—an important business activity, but not one that is usually associated with strategy. Strategic analysis is a crucial part of long-term business planning and the first step in the planning process.

At ClearPoint Strategy , we empower organizations with tools to conduct thorough strategic analyses, enabling leaders to gather crucial data, identify trends, and formulate actionable strategies. Our platform simplifies the process, providing comprehensive insights that drive strategic planning and execution.

See ClearPoint Strategy in action! Click here to watch a quick DEMO on the software

In this article, we’ll define strategic analysis in more detail, describe the methods used to conduct it, and list the key components of strategic analysis so you can carry it out successfully.

What Is Strategic Analysis?

Strategic analysis (sometimes referred to as a strategic market analysis) is the process of gathering data that helps a company’s leaders decide on priorities and goals , shaping (or shifting) a long-term strategy for the business.

‍ It gives a company the ability to understand its environment and formulate a strategic plan accordingly. Strategic analysis is paramount in any organization because it provides the context and backbone upon which the strategy and overall position of the business is formulated.

Why isn’t it enough to simply refer to quantitative data and charts to make a plan for the future? Because it is impossible for an organization to understand how it will achieve success without first having contextual information—in the form of both qualitative and quantitative data—regarding its internal resources and external environment.

The process of performing a strategic analysis is what adds context to quantitative data. Spotting trends and patterns in the data and evaluating them will inform your organization’s long-term plan.

You’ll know you’re performing a strategic analysis if you are:

• Focusing on high-level strategy. If you’re prioritizing operations, sales, marketing, or any other function, organization-wide strategic analysis won’t happen. The focus should be on information that directly impacts your long-term strategies and goals.
• Looking both backward and forward. Strategic analysis means assessing data about what happened in the past, so you can determine the implications of that performance and predict what is likely to happen in the future. The better your reports are at looking backward, the better your organization will be at moving forward.
• Involving company leaders in the process. Junior analysts may assemble the information, but the leadership team needs to make decisions and take action based on the information.

You don’t do a strategic analysis once and then disregard it when your strategy is developed and implemented. To remain adaptable in a changing business environment—whether the changes are due to a growing number of employees, new government regulations, or anything else—it’s advisable to conduct a strategic analysis periodically.

Organizations that are part of fast-changing industries should conduct this exercise (in abbreviated form if need be) more frequently than those that are not. Doing an annual strategic market analysis refresh will not only help your organization stay on track over the course of a few years but can also help inform your annual slate of initiatives.

Types Of Strategic Analysis

There is no standard strategic analysis “format”; rather, there are a number of methodologies available to help guide you through the process of collecting and analyzing relevant data for strategy planning.

Two of the most commonly used methods are SWOT and PESTLE.

• A SWOT analysis (which stands for strengths, weaknesses, opportunities, and threats) helps organizations identify where they’re doing well and where they can improve, both from an internal and external perspective. Strengths and weaknesses are considered internal factors, and opportunities and threats are considered external factors.
• A PESTLE analysis focuses entirely on external factors in the political, economic, social, technological, environmental, and legal realms that your organization can’t control but should prepare for. Such an analysis might call attention to things like changing tax legislation, new laws or legal procedures, fluctuating interest rates, etc. Any change that might occur and would have a material impact on your business should be considered in your strategy planning.

Many organizations do both a SWOT and PESTLE analysis to get a complete picture of the business environment. Your entire leadership team should be heavily involved in these analysis sessions, as should any other personnel who can bring relevant data points or perspectives to the table.

Some team members may be able to speak to strengths and weaknesses through experience; others may have access to data that supports (and provides context around) those viewpoints. A team that is knowledgeable about both the company and industry will produce the most effective strategic analysis.

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Key components in strategic analysis: 5 steps.

Listed below are the five steps to carrying out a strategic market analysis. But before we jump into the steps, remember: What differentiates strategic analysis from strategic decision making is that strategic analysis is only part of the decision making process. It’s a necessary (and very important) step, and will ensure you make informed and thoughtful decisions. So once you’re finished with your analysis, think of it as a tool in your decision making toolbox and refer to it often.

The five steps of a strategic market analysis are:

• Determine the level of strategic analysis you’re performing. Is your analysis intended for the corporate, divisional, or functional area (such as marketing or sales) level? It’s helpful to understand your company’s strengths, weaknesses, opportunities, and threats at all levels of the business, so you can devise the best strategy for future progress.
• Gather a team to help. Participants should include members of the board or leadership, along with representatives from finance, human resources, operations, sales, and any other critical functions. Remember—you need people with different perspectives on the business, at least some of whom can help identify and evaluate internal and external data.
• Use one or more analytic methods such as SWOT or PESTLE to conduct your analysis. Direct team members to bring relevant quantitative and qualitative information, which may also include feedback from outside groups such as customers or industry experts, for example. Whether or not your organization uses the Balanced Scorecard (a strategy management framework), its four perspectives can be very helpful for guiding the discussion once everyone is assembled. (You can see what we mean in this SWOT analysis example. )
• Summarize your findings and present them to the team. Because the analysis will serve as the foundation of your strategy, you’ll need to prepare a document that summarizes your findings. Prepare a report that provides some context around your analysis and highlights the conclusions that were drawn, preferably in a way that’s visually pleasing. While presentation might not seem like a big deal, it is—your audience will find the information easier to read and absorb if it’s presented in an attractive way. Ultimately, you’re more likely to get buy-in for whatever strategy you devise when you show that it originated from a thoughtful, detailed analysis.
• Devise a formal strategy based on the analysis. Use your strategic analysis to organize your priorities and create goals, as well as measures and projects that will help you achieve them. How can you use your strengths to take advantage of opportunities? How can you minimize threats and weaknesses going forward? Have any new priorities emerged as a result of this analysis? Create a strategy map that visually shows your organization’s overall objectives and how they relate to one another.

Done correctly, this analysis is a valuable tool for improving business performance; it can also prompt organizations to be more innovative with their strategy.

Strategic Analysis Examples

Some organizations struggle to differentiate strategic analysis from other types of analysis; that means they’re also usually confused about what software tools should be used for the job.

As co-founder of the strategy software company ClearPoint , I often find myself having conversations with prospective customers to clarify their activities (are they doing strategic planning or not?) and discuss whether ClearPoint can help. Below are summaries of three such conversations—do any of them reflect what you’re currently doing?

Story #1: Strategic Analysis Vs. Operational Data

A local government prospect asked me if ClearPoint’s software could track individual court cases and budget line items.

‍ I explained that ClearPoint is designed to track information that enables organizations to do strategic analysis. We can track summary information—such as the total number of cases each month or budget status for projects—but not individual court cases or department expenses. Here’s why:

• Analyzing summary information is strategically useful because it provides direction for an organization’s long-term strategy. For example, if one type of court case is appearing frequently, the local government may want to change its five-year plan to increase court staffing levels or reorganize the layout of a court building. The strategic analysis might also be something the municipality communicates to lawmakers in an effort to change the way current laws are executed through the court system.

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• Tracking individual court cases or standalone budget items is operational data and not as helpful for strategic analysis. While important, operational data as individual items is too detailed to extrapolate into trends or summaries that might shift an organization’s strategy. For example, ClearPoint doesn’t track the outcome of Case #1234 and how long it took to process.

The ideal way to use our system would be to analyze the average length of time to close a specific type of case, but not to track cases one by one. Another example: You can’t make strategic decisions to fund (or defund) certain projects based on a team’s expenses for new computers or division’s investment in technology upgrades.

The goal of strategic analysis is to chart performance in order to see patterns and trends, which can help predict future outcomes. Tracking one-off items won’t accomplish that goal. (Don’t get me wrong; you need to track all of the transactions, but just not in ClearPoint.)

ClearPoint can link strategic data from an operations system. This gives you the complete data story—both high-level and detailed information—within one platform.

Story #2: Strategic Analysis Vs. Data Analytics

I met with a manager at a large media corporation who inquired if ClearPoint could provide insights on its media campaigns, similar to what data visualization software like Tableau offers.

‍ ClearPoint can report on the status, progress, and results of different campaigns or initiatives, but again is not designed to provide individual data points. For example, our platform cannot provide impressions from thousands of individuals or tweak information by demographic groups. That is data analytics, and very different from strategic market analysis.

‍ Similar to the previous section, you should look at the results of media impressions to learn how the market is reacting to your products—but those impressions or data analytics will not drive your strategy.

You should have strategic goals and measure progress in achieving those goals. Changes over time to the average reaction of those media impressions will help you make strategic decisions. ClearPoint ’s strength is in summarizing and interpreting data analytics to simplify and improve management reporting, so organizations can focus on making better strategic decisions.

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Story #3: strategic analysis vs. customer relationship management.

A nonprofit organization asked me if ClearPoint could replace its customer relationship management (CRM) software.

‍ CRM software cannot do strategy management. Managing customers and managing strategy requires very different functions and capabilities within a software platform...and it won’t surprise anyone if the strategy planning office and sales team have different opinions on which software has the biggest benefit for an organization.

Tracking all of your customer interactions and the results of those interactions isn’t a job for ClearPoint or any other strategic analysis program. To focus on strategy from a customer standpoint , you need the ability to summarize all prospect and customer information to discern trends. Then your sales leadership team can make decisions like which audiences to target, which products or services to push, etc. Again, this is managing high-level information and not one-off data points.

Both types of software are important, and they are important for solving different types of problems.

My Thoughts on Strategic Analysis

Given the pace of change in the business world, I strongly believe you need strategy at the center of your management process to ensure you're achieving your goals.

‍ That’s not to say you should ignore operational or customer data—data that aids internal analysis in strategic management meetings is critical to your success, but it won’t determine how your business should be run.

Strategy management and analysis should be the big gear that drives all the smaller gears doing operations, data analytics, and more. You likely need different tools to manage all your data, but platforms like ClearPoint can connect all the pieces to tell the entire story and help you drive your organization with strategy, not data points.

If you’re interested in a tour of our software, let us know—we’re happy to show you around!

Optimize Your Strategic Analysis with ClearPoint Strategy Software

Take your strategic analysis to the next level with ClearPoint Strategy . Our platform is designed to help you gather, analyze, and act on critical data, ensuring that your business decisions are informed and effective.

With tools for SWOT and PESTLE analyses, comprehensive reporting, and real-time collaboration, ClearPoint makes it easy to stay ahead in a rapidly changing environment.

Book a demo today and see how ClearPoint Strategy can streamline your strategic analysis and drive your organization's success!

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What are strategic analysis tools.

Strategic analysis tools are methodologies used to evaluate an organization's strategy and competitive environment. Common tools include:

- SWOT Analysis: Identifies strengths, weaknesses, opportunities, and threats. - PEST Analysis: Analyzes political, economic, social, and technological factors. - Porter’s Five Forces: Examines the competitive forces that shape an industry. - BCG Matrix: Assesses the market growth rate and market share of a company’s products. - Value Chain Analysis: Identifies the primary and support activities that add value to a product. ‍

How do you do a strategic analysis?

To perform a strategic analysis:

- Define Objectives: Determine what you aim to achieve with the analysis. - Gather Data: Collect relevant data on internal and external factors affecting the organization. - Use Strategic Tools: Apply tools like SWOT, PEST, and Porter’s Five Forces to analyze the data. - Interpret Results: Evaluate the findings to understand the organization’s strategic position. - Develop Strategies: Formulate strategies based on the analysis to achieve organizational goals. - Implement and Monitor: Execute the strategies and monitor progress, making adjustments as necessary. ‍

What is strategic analysis in business?

Strategic analysis in business is the process of examining an organization’s internal and external environments to inform strategy development. It involves identifying strengths, weaknesses, opportunities, and threats (SWOT) and understanding competitive dynamics and market conditions. The goal is to create strategies that leverage strengths, mitigate weaknesses, capitalize on opportunities, and counteract threats.

Why is SWOT analysis important in strategic planning?

SWOT analysis is important in strategic planning because it:

- Identifies Key Factors: Helps identify critical internal and external factors that affect the organization. - Supports Decision Making: Provides a structured approach for evaluating strategic options. - Facilitates Objective Assessment: Encourages an objective look at the organization’s strengths and weaknesses. - Highlights Opportunities and Threats: Uncovers opportunities for growth and potential threats to be mitigated. - Aligns Strategies: Ensures that strategies are aligned with organizational strengths and market opportunities. ‍

Why is strategic analysis important?

Strategic analysis is important because it:

- Informs Strategy Development: Provides insights that guide the formulation of effective strategies. - Enhances Decision Making: Enables informed, data-driven decisions. - Identifies Opportunities and Threats: Helps recognize potential opportunities for growth and threats to be addressed. - Improves Competitive Position: Assesses the competitive landscape to help the organization gain a competitive edge. - Aligns Resources: Ensures that resources are allocated efficiently to support strategic objectives .

RJ Messineo

RJ drives new business for ClearPoint, guiding prospective clients through the sales process.

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A Checklist for Business Analysis Planning

Written by Edmund Metera on February 18, 2021 . Posted in Articles .

Use the Universal Business Analysis Planning Checklist as You Plan Your Business Analysis Approach.

Every project is a unique, temporary endeavor.

The business process management, regulatory compliance and digital transformation projects that business analysts may play a role in all come with different goals, scopes, teams, timelines, budgets dependencies and risks.  Though many projects follow similar methodologies they are all tailored for project scope constraints and to take advantage of available resources, opportunities and lessons learned from prior work. 

Each business analyst also comes with a unique set of skills and experiences. Almost all business analysts have great communications skills and at least some experience-based business domain knowledge. That’s why they became business analysts in the first place. Every business analyst has uniquely acquired knowledge of business analysis techniques and business domains through personal study, practice and experience. Many have also been trained in elicitation, requirements management, modeling, measurement, analysis and documentation techniques. An ever-growing number have received professional certifications, such as the IIBA Certified Business Analysis Professional (CBAP) or the PMI Professional in Business Analysis (PMI-PBA).

What is Business Analysis Planning?

The most skilled business analysts are not only competent in many business analysis techniques but also consciously tailor their business analysis approach for each project that they engage in.  They have learned to consider key project dynamics along with their own competencies and to tailor their planned business activities and deliverables to suit each project’s unique dynamics. Regardless of your own level of business analysis experience, maturity, and whether you are formally trained, certified or not, you can still consciously assess each project’s dynamics and tailor your forthcoming business analysis work to get the most productivity and value out of your business analysis efforts in each project.

The most significant project dynamics include:

• The methodology, or sequence of stages or major milestones, and the business analysis products or outcomes that are expected by the end of each stage/milestone (and before starting the next).
• The budget and schedule, not only to meet them, but to take advantage of contingency or schedule slack opportunities, to increase the value, quality or to learn.
• The key project stakeholders and relationships that are new and changed and forming, to take a proactive role in fostering and building relationships with and among that team.
• The types and combinations of elicitation techniques that will be best suited for producing or validating business analysis deliverables. 
• The business domain knowledge and experiences of the diverse key project stakeholders, including your own unique set of business analysis competencies.

The Universal Business Analysis Planning Checklist

You can be more effective in planning your business analysis approach if you follow a consistent, clear agenda that considers the common project dynamics.

The Universal Business Analysis Approach Planning Checklist covers the most common project dynamics. You can use this as an agenda to elicit and discover a comprehensive view of a project’s key dynamics, its opportunities and use what you discover to adapt/tailor your business analysis approach.

As an exercise, think of a project that you have recently worked on, you are currently working on, or will soon be working on.  Answer questions in the following checklist for yourself.

Project Life Cycle

• What are the planned stages of this project?
• What stage are we currently in?
• What is the business analysis deliverable (or set of deliverables) that I am responsible for producing in this stage?
• What is the intended use of my business analysis deliverable(s) and who will use it?

Schedule and Effort Budget

• How much effort can I spend and by what target date am I expected to produce my business analysis deliverable(s)?
• Is that about what I also estimate it will take?
• Is either my effort or date estimate higher than the effort budget or target date? If so, how might I adapt my effort, scope, activities or configuration of my deliverable(s)?

Project Stakeholders and Relationships

• Does this project have an executive sponsor, project owner or product owner, project manager, specialists and business subject matter experts?
• What are the names and titles the persons in these project roles?
• Who’s new to each other on this team?
• Are there local and who’s remote team members?
• Who is responsible for producing, accepting or needs to be consulted or informed of each of the project’s key deliverables, particularly the business analysis deliverable(s)?

Elicitation Techniques

• Documentation Reviews – What documentation or prior work products are available to review?
• Interviews and Workshops – Who can I interview or include in a workshop, and what questions would I need to ask?
• Observations – Where and what kinds of observations may be needed and how could I arrange for them?
• System reviews – What system(s) are available to review and for what information?
• Surveys – Who could I engage in a survey and using what types of questions?
• Considering this project’s stakeholders and relationships, the elicitation techniques available to me, and my own core competencies, which elicitation techniques are best suited gather and validate my business analysis information?

Organizational Assets

• Collaboration tools, facilities, survey tools?
• Diagramming or modeling software?
• What prior business analysis work (e.g., documents, models) that I can draw from?
• Does my organization offer training in the subject business domain?

Competencies and Knowledge

• Who on the project team has what expert business domain knowledge?
• What is my own business domain knowledge?
• What are my strongest core business analysis competencies?
• Where can you take advantage the team’s diversity of knowledge and competencies?
• Who are the best stakeholders in this project to engage in elicitation of content or validation of business analysis deliverables and what is or are the best elicitation techniques to use?

On reflection, are you able to answer these questions for yourself? When you go into your project workplace, who will you include in this conversation?

Conclusion:

Business analysis planning is a recognized business analysis activity. The IIBA Body of Knowledge (BoK) includes the Plan Business Analysis Approach activity within its Business Analysis Planning and Management process. The BoK also lays out the scope of what should be covered by a Business Analysis Approach as “The set of processes, templates, and activities that will be used to perform business analysis in a specific context.”

The time and formality that you apply to business analysis planning is up to you. At the financial institution where I work as a project and program manager, our business analysts typically tailor and document a business analysis plan for each new project to which they are assigned. 

I think of business analysis planning as a form of insurance. Spend a little time upfront to assure that the bulk of the rest of your business analysis efforts will be as well spent and effective as possible. Expect the benefits of tailoring a business analysis plan for every project to be that:

• It will help you to align your own core business analysis competencies to each project, and
• You and the project will gain the most value from your business analysis efforts.

That’s a value-adding proposition. You are welcome to contribute comments about project dynamics that impact business analysis plans or about the checklist presented through the Contact Us page at www.ProcessModelingAdvisor.com.

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How to Write a SWOT Analysis for a Business Plan

• March 21, 2024
• Business Plan , How to Write

Navigating the complexities of business requires a clear understanding of your strategic position, and a SWOT analysis is an essential tool to help you achieve this clarity. It’s a straightforward method that breaks down into Strengths, Weaknesses, Opportunities, and Threats, providing a snapshot of where your business stands and guiding your future strategic moves.

With this guide, you’ll learn how to leverage your advantages, address challenges, seize new opportunities, and guard against potential threats. Let’s dive into the process together and set a strong foundation for your business’s strategic planning. Let’s dive in!

What is a SWOT Analysis?

A SWOT analysis is a strategic planning tool used to identify and understand the Strengths, Weaknesses, Opportunities, and Threats related to business competition or project planning. This method helps organizations in assessing both internal and external factors that could impact their objectives.

• Strengths : Positive attributes internal to the organization and within its control. Strengths are resources and capabilities that can be used as a basis for developing a competitive advantage.
• Weaknesses : Factors that are within an organization’s control but detract from its ability to attain the desired goal. These are areas the business needs to improve to remain competitive.
• Opportunities : External chances to improve performance in the environment. Opportunities reflect the potential you can leverage to grow your business or project.
• Threats : External challenges to the business’s performance or project’s success. Threats might stem from various sources, such as economic downturns, increased competition, or changes in regulatory landscapes.

Why Use a SWOT Analysis?

We use a SWOT analysis for several important reasons in business and strategic planning:

• Strategic Overview : It provides a concise and comprehensive overview of the current strategic position of the business or project. By examining internal and external factors, stakeholders can get a clear picture of their situation.
• Decision Making : SWOT analysis aids in decision-making by highlighting the strengths to leverage, weaknesses to address, opportunities to pursue, and threats to mitigate. It helps in prioritizing actions based on the analysis.
• Opportunity Identification : SWOT analysis is instrumental in identifying new opportunities for growth and expansion. Opportunities might come from market trends , economic shifts, or changes in technology.
• Risk Management : By identifying threats, organizations can develop strategies to address or mitigate these risks before they become significant issues. It’s a proactive approach to managing potential external challenges.
• Resource Allocation : Understanding the organization’s strengths and weaknesses helps in the effective allocation of resources. Resources can be directed to areas where they are needed most or where they will have the highest impact.
• Competitive Advantage : It helps businesses identify unique features and capabilities that give them a competitive edge in the market. Recognizing these strengths can guide marketing strategies and business development.

How to Write a SWOT Analysis

Writing a strength in a SWOT analysis involves identifying and articulating the internal attributes and resources of a business or project that contribute to its success and competitive advantage. Here’s how to effectively write a strength in a SWOT analysis:

• Identify Internal Positive Attributes : Focus on internal factors that are within the control of the business. These can include resources, skills, or other advantages relative to competitors. Consider areas like strong brand reputation, proprietary technology, skilled workforce, financial resources, strategic location, and efficient processes.
• Be Specific and Relevant : General statements like “we have a good team” are less helpful than specific ones like “our team includes industry-recognized experts in X field.” The more precise you are, the more actionable your analysis will be. Ensure that the strengths are directly relevant to achieving the business’s goals and objectives.
• Use Quantifiable Data When Possible : Whenever you can, back up your strengths with quantifiable data. For example, “a customer satisfaction rate of 95%” or “a 20% lower production cost than industry average” provides concrete evidence of your strengths.
• Compare to Competitors : Strengths are often relative to the competition. Identify areas where your business outperforms competitors or fills a gap in the market. This might involve superior product quality, a unique service model, or a more extensive distribution network.

Example: Instead of simply stating “Experienced management team” as a strength, you could write: “Our management team has over 50 years of combined experience in the tech industry, including a track record of successful product launches and market expansions. This depth of experience provides us with strategic insights and operational expertise that have consistently resulted in market share growth and above-industry-average profitability.”

Writing a weakness in a SWOT analysis involves acknowledging and detailing the internal factors that limit or challenge your business or project’s ability to achieve its goals. Here’s a structured approach to effectively articulate weaknesses in a SWOT analysis:

• Identify Internal Limitations : Focus on internal attributes that are within the control of the organization but currently act as disadvantages. Weaknesses might include insufficient resources, lack of expertise, outdated technology, poor location, limited product range, or inefficiencies in processes.
• Be Specific and Honest : It’s important to be honest and specific about your organization’s weaknesses. Vague statements won’t help in addressing these issues. For instance, rather than saying “we need to improve our marketing,” specify “our current marketing strategy does not effectively reach our target demographic of 18-25-year-olds on digital platforms.”
• Use Internal Comparisons and Feedback : Compare your performance, processes, and resources against your own past performance or industry benchmarks. Utilize customer feedback, employee insights, and performance data to identify areas of weakness.
• Keep it Constructive : While it’s crucial to be honest about weaknesses, frame them in a way that focuses on potential for improvement. Consider each weakness as an area for development and growth.

Example: Instead of a broad statement like “Inadequate online presence,” a more effective description would be: “Our business currently lacks a robust online presence, reflected in our outdated website and minimal engagement on key social media platforms. This limits our ability to attract younger demographics who predominantly discover and interact with brands online. Improving our online visibility and engagement could enhance brand awareness and customer acquisition.”

Opportunities

Writing opportunities in a SWOT analysis involves identifying and articulating external factors that your business or project could exploit to its advantage. Opportunities are elements in the environment that, if leveraged effectively, could provide a pathway for growth, improvement, or competitive advantage. Here’s how to systematically approach writing opportunities in your SWOT analysis:

• Spot External Trends : Focus on the trends and changes outside your organization that could be beneficial. These might include technological advancements, shifts in consumer behavior, market gaps, regulatory changes, or economic trends.
• Be Relevant and Actionable : Ensure that the opportunities you identify are relevant to your business and actionable. They should align with your business’s strengths and capabilities, allowing you to take practical steps toward capitalizing on them.
• Use Market Research : Base your identification of opportunities on solid market research. Understand your target market , industry trends, and the competitive landscape to pinpoint where the real opportunities lie.
• Detail Potential Benefits : Clearly articulate how each opportunity could benefit your business. Whether it’s entering a new market, launching a new product line, or adopting new technology, explain the potential impact on your business growth and success.

Example: Rather than vaguely stating “New market segments,” a more strategic description of an opportunity could be: “With increasing consumer interest in sustainable living, there’s a growing market segment for eco-friendly products. Our business’s strong commitment to sustainability and existing lineup of environmentally friendly products positions us well to capture this emerging market. Expanding our product range to include more items that cater to eco-conscious consumers can tap into this trend, potentially opening up new revenue streams and enhancing our brand’s reputation as a leader in sustainability.”

Writing threats in a SWOT analysis involves identifying external challenges that could pose risks to your business or project’s success. These are factors outside your control that have the potential to harm your operations, financial performance, or strategic positioning. Addressing threats effectively in a SWOT analysis requires a focused approach:

• Identify External Challenges : Start by pinpointing the external factors that could negatively impact your business. This can include new competitors entering the market, changes in consumer preferences, technological advancements that render your product less desirable, regulatory changes, or economic downturns.
• Be Precise and Realistic : Clearly define each threat in specific terms, avoiding vague descriptions. Being realistic about the level of risk each threat poses is crucial; not every external challenge is a dire threat, but understanding the potential impact is key for strategic planning.
• Assess the Impact : For each threat identified, evaluate how it could impact your business. Consider the worst-case scenario and more likely outcomes to gauge the potential severity of the threat. This helps in prioritizing which threats need immediate attention and strategic response.
• Use Reliable Sources : Base your identification of threats on solid, reliable information. This might include industry reports, economic forecasts, and news sources that provide insights into market dynamics and external conditions.
• Consider Your Weaknesses : Link potential threats to your identified weaknesses. Understanding how external threats could exploit your vulnerabilities offers valuable insights for fortifying your business against these challenges.

Example: Instead of broadly stating “Economic uncertainty,” a more actionable description of a threat would be: “The looming economic downturn poses a significant threat to discretionary consumer spending. Given our business’s reliance on non-essential luxury products, a reduction in consumer spending could directly impact sales. This economic uncertainty requires us to diversify our product offerings and identify more value-oriented options to maintain customer engagement and spending during tighter economic conditions.”

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How to Measure Your Business Strategy's Success

• 04 Jan 2024

Measuring your business strategy’s success is vital to strategy execution .

Despite its importance, research by SurveyMonkey shows that only 35 percent of business owners set benchmarks or goals. Among those who set them, 90 percent consider themselves successful. Of those who don't, only 71 percent report the same.

If you want to achieve organizational objectives and avoid common strategic planning pitfalls , here’s why it’s important to evaluate your strategy.

Access your free e-book today.

Why Is It Important to Evaluate Your Strategy?

Evaluating your strategy can help your organization achieve its goals and objectives while highlighting necessary adjustments for long-term success.

Its benefits include:

• Ensuring organizational alignment
• Establishing accountability
• Optimizing operations

Assessing your business strategy is an ongoing process. To ensure it’s set up to succeed, you must evaluate it pre-, during, and post-implementation. Here’s how to do so.

How to Measure Your Strategy’s Success

1. revisit goals and objectives.

Every business strategy needs clearly defined performance goals. Without them, it can be difficult to identify harmful deviations, streamline the execution process, and recognize achievements.

After establishing goals and objectives, plan to revisit them during and after implementing your strategy. According to Harvard Business School Professor Robert Simons in the online course Strategy Execution , the best way to do so is by comparing them to critical performance variables —the factors you must achieve or implement to make your strategy succeed.

For example, if your company’s value comes from customer loyalty, one of your critical performance variables could be customer satisfaction. When customers no longer receive value from your products or services, that could impact your company’s bottom line.

The best way to verify critical performance variables is by analyzing them against your strategy map —a visual tool outlining the cause-and-effect relationships underpinning your strategy. Those variables should also receive high importance on your balanced scorecard , which translates your strategy into goals and objectives.

By taking these steps, you can identify performance measures worth reviewing.

2. Review Measures

Evaluating business performance requires measures —quantitative values you can scale and use for comparison—and they must tell the right story.

According to Strategy Execution , you should ask three questions when reviewing measures:

• Do they align with my strategy?
• Are they objective, complete, and responsive?
• Do they link to economic value?

For example, if you want to improve your company’s brand loyalty, metrics worth monitoring include the number of new customers, average purchases per customer, and the number of social media followers.

A balanced scorecard can provide a holistic view of your business performance measures—ensuring all your employees are on the same page.

“You can have the best strategy in the world,” Simons says in Strategy Execution . “But at the end of the day, what everyone pays attention to is what they're measured on. So, you need to be sure that measures throughout the business reflect your strategy, so that every employee will devote their efforts to implementing that strategy.”

3. Supervise Monitoring Systems

While balanced scorecards are powerful diagnostic control systems —formal information systems used to monitor organizational outcomes—they don’t provide visibility into all measures of success. That’s why you need additional systems to streamline strategic plans’ evaluation.

For example, you can use customer relationship management systems’ analytics tools to generate reports that align with business goals and objectives. To boost customer loyalty, you can automate reports on:

• Purchasing patterns
• Purchase frequency
• Customer survey scores

“But to ensure that these systems are effective, you need to invest considerable time and attention in their design,” Simons says in Strategy Execution . “You must not only spend time negotiating and setting goals—as we've discussed—you must also design measures for these goals and then align performance incentives.”

4. Talk to Employees

Employee feedback and buy-in are other useful tools for measuring success.

For example, creative software company Adobe is known for its loyal employee base. That was put to the test when the company shifted to a subscription-based model, launching Adobe Creative Cloud .

Company leaders briefed employees on strategic changes and how they provided value to customers. They also encouraged employees to contribute ideas and feedback throughout the transition. With minimal internal pushback and a boost in collaboration, Adobe knew its strategy would succeed and ensure relevance in a constantly evolving market.

“The best businesses motivate their employees to be creative, entrepreneurial, and willing to work with others to find customer solutions,” Simons says in Strategy Execution .

Related: How to Create a Culture of Strategy Execution

5. Reach Out to Customers

Customer feedback is a key measure of your strategy’s success. According to a recent report by Zendesk , 73 percent of business leaders believe customer service directly links with business performance—with 64 percent attributing customer service to positive business growth.

Feedback can also reflect how well initiatives align with customer needs and expectations when it comes to value creation , making it important to consistently seek out ways to monitor attitudes toward your company and its strategy.

In Strategy Execution , Tom Siebel, CEO of C3 AI, shares his thoughts on customer satisfaction when measuring success.

“Everything that's important to the business, we have a KPI and we measure it,” Siebel says. “And what could be more important than customer satisfaction?”

Unlike your company’s reputation, measuring customer satisfaction has a more personal touch in identifying what they love and how to capitalize on it.

“We do anonymous customer satisfaction surveys every quarter to see how we're measuring up to our customer expectations,” Siebel says in the course.

Your customer satisfaction measures should reflect your desired market position and focus on creating additional value. When customers are happy, profit margins tend to rise, highlighting why this should be the final step in measuring your strategy’s success.

Success Is within Reach

Measuring your strategy’s success is a continuous process that requires understanding your company’s goals and objectives.

By taking an online strategy course , you can develop strategy execution skills to measure performance effectively. Strategy Execution provides an interactive learning experience featuring organizational leaders who share their successes and failures to help you apply course concepts and excel in your career.

Want to learn how to measure your strategy’s success? Explore Strategy Execution —one of our online strategy courses —and download our free strategy e-book to begin your journey toward implementing strategy successfully.

About the Author

How to Write a Customer Analysis

Elon Glucklich

9 min. read

Updated October 27, 2023

You’ve been hard at work conducting market research into your potential customers— developing a deep understanding of industry dynamics and the potential size of your market .

Hopefully, you’ve also spent time interviewing potential customers—learning about their behaviors and needs, and digging into publicly available data to support your research. 

But you still need to document these findings in a way that gives you an actionable road map to grow your customer base.

This is where a well-written customer analysis can be extremely useful. 

Including a customer analysis in your business plan will boost your marketing efforts by identifying your target customers , their needs, and how your product or service addresses these needs.

• Customer analysis vs market analysis

A market analysis is a broader exploration of the market and potential customers.  A customer analysis zooms in on the specific behavioral or demographic characteristics of individual customer segments in your target market.

The market analysis includes details like the number of customers you hope to serve and the types of competitors you must contend with. 

By contrast, the customer analysis looks at the specific attributes of your potential customers – their personal habits, values, beliefs, and other characteristics that might affect their purchasing decisions.

• What should a customer analysis include?

Demographics

Some of the earliest information you’ve collected probably about your customers includes:

• Gender/ethnicity
• Income level
• Geographic area
• Education level

Example: Suppose you own a business that creates an environmentally friendly cleaning product . Your customer demographics might include: 

• Age range: 30-60 (old enough to have used a variety of cleaning products in their homes)
• Income: Above average (more likely to buy a higher-priced alternative to discount cleaning products)
• Education level: college degree or equivalent (high enough education level to understand the product’s societal benefits).
• Employment: full-time employee

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Values and beliefs

This section captures the psychological and emotional factors that influence customer behavior. 

• Cultural backgrounds
• Ethical values

Let’s return to the environmentally friendly cleaning product example. You are more likely to attract customers who prioritize sustainability and are willing to pay more for products that match their values.

Buying behaviors

Analyzing buying behaviors involves understanding how, when, and why customers purchase. These behaviors impact:

• The channels customers prefer for shopping
• Price sensitivity
• Factors that trigger a buying decision

Example: Suppose you’re running an environmentally friendly cleaning products business. In that case, you might discover that most of your customers buy their cleaning products from a magazine for homeowners or that they typically buy multiple cleaning products simultaneously. 

Technology use

Nearly three-quarters of small businesses have a website . Even if your business doesn’t have one, your customers are, without a doubt, browsing the internet. 

So it’s critical to understand how your target customers interact with technology and to set up an online presence for your business if you aren’t already active. 

Key questions about customers’ technology habits include:

• Are they active on social media? If so, which platforms? 
• Do they prefer online shopping or in-store visits? 
• Are they more likely to respond to email marketing, blog content, or social media campaigns?

Example: Let’s say you discover that significantly more of your target customers visit websites like yours on a smartphone than a desktop. In that case, it would be important to optimize your website for mobile viewing or develop a user-friendly app . 

• 5 steps to write a customer analysis for your business plan

Now that we understand the individual pieces of a customer analysis, we’ll examine how to write a customer analysis for your business plan .

1. Use existing data

Regardless of your country, there are likely numerous sources of data published by government agencies, private industry, or educational institutions that could be relevant to your business.

Finding existing data is the best starting point for your customer analysis. It’s easy to find, it’s regularly updated, and it’s immensely valuable for providing context for your research. 

For instance, if you determine that your target demographic is people between 30 and 60, Census data can help you determine the number of residents in your selling area within that age range.

We’ll look at some examples of publicly available data for businesses operating in the United States.

U.S. Census Bureau

The Census Bureau publishes official population counts for the country, states, and local communities. Demographic characteristics like age, gender, and race sort the data. Census data also includes useful data for businesses, such as the total number of businesses, employment counts, and average incomes in local communities across the country.

Bureau of Labor Statistics

Data from the Bureau of Labor Statistics tracks changes in the U.S. workforce and the overall state of the labor market. The BLS publishes the Consumer Price Index , tracks consumer spending, and gauges overall consumer confidence. 

Examining this data can give you insights into the willingness of consumers to pay for your product or service.

Bureau of Economic Analysis

The Bureau of Economic Analysis takes a broader look at the performance of the U.S. Economy. You can use BEA data to find personal income and corporate profit data by industry. 

If you make a product or service used by other businesses, these figures can help you understand the financial health of the broad customer base you’re targeting.

Federal Reserve

The Federal Reserve publishes various financial reports, such as consumer credit and spending statistics , as well as the health of banks. 

This data can give you important context about the financial health of your customers, which could help you determine pricing strategies—like whether you should offer flexible payment plans.

Industry associations

There are thousands of private sector industry associations in the United States alone. These organizations not only advocate for the businesses in their field. They provide members with a wealth of helpful information, such as “state of the industry” reports and business surveys. 

You should leverage customer data from these peer organizations as a business owner.

Academic institutions

Many university business schools make their research publicly available online. Scholars make a career out of researching market and industry trends, and much of their work is available through online searches. 

2. Review customer feedback

One of the most direct ways to show an understanding of your customers in your analysis is by reviewing their feedback.

If you’re a new business without direct customer feedback yet, that’s OK. Instead, look around at what people are saying about your competitors . You might find common complaints from customers in your industry about the products available. 

You can then reach out and interview potential customers to better understand their needs.

If you have an existing business, there may already be reviews of your company on Google or social media sites like LinkedIn. Doing so can help you determine if customers are struggling to use your product or have suggestions for improvements. 

Read as many reviews as possible, and use them to show an understanding of your customers’ needs in your analysis.

3. Use third-party data

So far, we’ve discussed free, publicly available sources to find information about your customers. 

But for those willing to dig deeper, third-party data providers can help you uncover information that’s truly unique to your business and your customers.

Google Analytics

Third-party data providers like Google track the activity of users across numerous websites. Google has its own tool, Google Analytics , which makes that information available on your company’s website.

This data is a gold mine for understanding your customers. Besides giving you a demographic and geographic breakdown of your visitors, it can tell if they view your site on a desktop or smartphone, what pages they’re clicking, navigating around your site, and much more.

For new business owners, Google Trends is a powerful tool to discover what people are searching for online. 

For the environmentally friendly cleaning products business we’ve used as an example—you could see how many people are searching on Google for information about products like floor cleaners or dishwasher detergents.

Social media metrics

If your business uses social media, there are plenty of tools to help you understand your audience on these platforms. 

Many social media companies make their data available to businesses at a cost. For instance, the Facebook Audience Insights platform gives you information about the types of people who visit your page or interact with your posts.

There are also third-party tools like Hootsuite, Sprout Social, and Buffer, which track various metrics across social media platforms.

Wherever you find the data, including social media metrics in your customer analysis provides instant feedback about how customers interact with your business.

Specialty tools

Software companies have created numerous tools that collect and analyze customer data from various online sources. 

Audience research tools like SparkToro and FullStory analyze large amounts of data online and spot trends—such as the topics people discuss online and which websites or social media accounts those audiences visit. 

These are insights that would be incredibly time-consuming to get directly from customers. However, understanding where potential customers spend time online and what they talk about can easily turn your analysis into a targeted marketing campaign that addresses their needs.

4. Create a customer persona

After gathering and analyzing all this data, you should have plenty of information about your customers. The next step is to create a customer persona . In case you need a refresher, the customer persona is a semi-fictional representation of your ideal customer based on your collected data.

For example, a customer persona for that environmentally friendly cleaning products business will reflect that audience’s demographics, behaviors, and needs. 

In addition to being an effective tool to focus your marketing efforts, creating this persona can help determine the size of your customer base and how to prioritize your time and resources to attract them to your business. It’s also helpful to show potential investors you know your target audience.

5. Connect to your problem/solution statement

Many business plans include a problem and solution statement as early as the introduction. It’s a reasonable way to start, considering that successful businesses identify a problem and provide a solution. 

So as you put your customer analysis together, ensure the research is grounded in the problems they’re experiencing. Doing so will keep you accountable by making you validate your product or service as the solution they need.

• Get started with your business plan template

A customer analysis is a key part of any business plan. But it’s just one piece. At Bplans, we take some of the pain out of business planning. 

We’ve developed a free business planning template to help reduce entrepreneurs’ time to create a full, lender-ready business plan.

Bplans has also collected over 550 free sample business plans across numerous industries. Find one that fits your industry to get inspiration and guidance when writing your plan.

Elon is a marketing specialist at Palo Alto Software, working with consultants, accountants, business instructors and others who use LivePlan at scale. He has a bachelor's degree in journalism and an MBA from the University of Oregon.

Table of Contents

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How to Write a Customer Analysis Section for Your Business Plan

Free Customer Analysis Template

• July 12, 2024

A customer contributes significantly to building a winning brand.

Understanding your target consumer, their needs, the problems they face, and the way they behave assists you in creating products and services that can satisfy your customer needs.

Customer analysis is a quintessential part of your business plan. Writing it accurately will help you make informed decisions for other aspects of business planning, i.e. product development and business strategies.

So let’s get started. This blog post describes the process of creating customer analysis in a business plan and guides you with a customer persona example.

What Is Customer Analysis?

Customer analysis is an important section of your business plan offering a comprehensive and in-depth understanding of your potential customer. It is a study of their behavioral, psychological, and demographic patterns to help you make sound business decisions.

Such analysis assists in developing products and services addressing the pain points of your customers and in determining your pricing, marketing, and customer retention strategies.

Why conduct a customer analysis?

A thorough and insightful customer analysis offers a plentitude of benefits. Here are a few you should know of:

• Helps optimize product development by offering insights into customer behavior, needs, and pain points.
• Helps gain a competitive advantage by identifying the pain points that are unaddressed by competitors.
• Helps tailor your marketing efforts to cater to specific customer segments.
• Increases customer retention by giving you a thorough insight into what the customer needs and what drives their decision.

If you think of it, customer analysis forms the basis for designing your products and services, devising your marketing and sales strategies, determining your pricing point, and driving your business growth.

How to Write a Customer Analysis Section

Writing a customer analysis includes extensive research and collecting data from various sources. This data consists of qualitative and quantitative aspects which help you write an accurate customer analysis for your business plan.

Let’s now understand a step-by-step process to write your customer analysis.

1. Identify your customers

The first step of customer analysis is to identify your potential customers and collect information about their special characteristics. Such information comes in handy when you want your product and marketing strategies to align with your customers’ needs.

However, what details should you collect and how should you segment it? Well, segmenting in the following manner can help you get a headstart.

• Demographic: Age, gender, income
• Geographic: Location, type of area (Rural, suburban, urban)
• Psychographic: Values, interests, beliefs, personality, lifestyle, social class
• Technographic: Type of technology the buyer is using; tech-savviness
• Behavioral: Habits, frequent actions, buying patterns
• Industry (For B2B): Based on the industry a company belongs to.
• Business size (For B2B): Size of the company

Customer database can help capture the above data for existing businesses. However, for additional details, you can retort to surveys and forums.

If you are a startup, conducting an audience analysis might seem impossible as you don’t have an existing customer base. Fortunately, there are numerous ways through which you can study your potential customers.

A few of them are:

• Identifying who would benefit from your product/service
• Analyzing your competitors to understand their target customers
• Using social media to prompt potential buyers to answer questionnaires

2. Define the needs of your Customers

Now that you have identified your customers, the next step is to understand and specify their needs and challenges. This is the step where you need to go hands-on with your research.

Getting to know your customers’ needs helps you determine whether or not your product or service hits the mark.

You can adopt one of these approaches to understand the needs of your customers:

Engage directly with potential Customers

A very reliable way to get to know your customers is to simply engage with them, either in person or on a call. You can reach out to your customers using one of the following ways:

• One-on-one interviews
• Focus groups
• Beta testing (invite users to test your products).

These techniques can help you collect adequate data for your analysis.

However, before approaching your customers, set up a systematic survey that can get you structured data for analysis. To ensure that your questionnaire isn’t just covering surface-level information but a deep interrogation of customers’ problems, use the technique of five whys .

Collect data from your customer support

Customer support is the place where you can find raw and unfiltered feedback given by your customers. Analyzing this data helps you understand the pain points of your customers.

You can further gather direct customer feedback by contacting the customers who had issues with your products. This will help you understand the pain points and gaps in your products more vividly.

Run surveys and mention statistics

Talking to your customers helps you get qualitative information that can be used to alter your product or services according to your customers. The next part is to attain quantitative information, in other words, presenting numbers to support the previous data.

Conducting surveys is one of the commonly used methods for quantifying information. You can conduct in-app surveys, post-purchase surveys, or link surveys in email and apps, etc.

You can also collect statistical data to support your conclusions from the interviews. These include stating studies related to customer choices, results from popular surveys, etc.

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3. Create a Customer Persona

It is now time to present your collected data using a customer persona.

A customer persona represents a segment of customers with similar traits. It outlines the psychological and demographic features of your potential customer group and thereby assists you in making important strategic decisions.

Consider it as a tool that will make your data analysis process easier and more efficient.

Now, you can either use customer persona templates or an AI tool to generate your buyer’s persona. However, to get a more thorough insight check how a customer profile looks.

Customer Persona Example

This is a customer persona example of an internet service provider(ISP) to help you get a more practical overview.

• About: A lot of customers remain at home and have a minimal and easy-going lifestyle. They need high-speed, interruption-free internet access.
• Demographics: Age is between 30 and 40, has a laid-back lifestyle, lives in suburban areas, and the income range is between $10,000 to $40,000.
• Professional role: Shop owners, employees, freelancers, etc.
• Identifiers/Personality traits: Introverts, like routines, make schedules, prefer online shopping, and stick with the companies they trust.
• Goals: Wants easily available service, and 24×7 customer support, prefers self-service technologies and chatbots over interacting with representatives.
• Challenges: Fluctuating internet connection while working or consuming media. Not enough signal coverage.

4. Explain the product alignment to the Customer’s Needs

You’ve gathered info and created customer personas. The final step is to explain how your product or service caters to the needs of your customers.

Here, you specify the solution you offer to tackle the challenges faced by your customers.

Mention the USPs of your product and its features, and clarify how they benefit the customer. Also, mention how your offerings make the customers’ lives better.

Continuing the previous example of an ISP provider, this company can show how its high-speed Internet plans cater to the needs of individual working professionals. They can focus on aspects like customizable plans, cost-effectiveness, and coverage in remote areas to attract users.

And there you have it—a guide to writing your customer analysis. Just ensure that you maintain accuracy while making assumptions and predictions to make this section useful for making further decisions.

Build a solid business foundation with customer analysis

Understanding you r customers inside out assists you in making profitable decisions for your business. But remember, it is an ever-evolving and continuous process. You need to analyze your customers as often as possible to stay updated about their ever-changing needs.

After all, understanding what your customers need and what they prefer will help you devise strategies that ensure maximum customer satisfaction.

Now quickly create customer profiles for your business with Upmetrics’s AI SWOT analysis generator. However, once you do that, use this tool to streamline your entire business planning process.

Build your Business Plan Faster

with step-by-step Guidance & AI Assistance.

Frequently Asked Questions

What key components should be included in customer analysis.

Here are the key components of a sound customer analysis:

• Market segmentation
• Customer behavior analysis
• Customer profiling
• Customer journey mapping
• Trend analysis and future customer behavior

How can I gather data for my customer analysis?

Here are a few ways for you to gather data for your customer analysis:

• Gather customer feedback using surveys, forums, and questionnaires.
• Use secondary methods to gather industrial data, competitors’ data, and data from publications.
• Use the collected data till data (i.e. social media analytics, customer support data) to form your analysis.

Can customer analysis help in forecasting future trends?

Absolutely, yes. A detailed customer analysis helps you to understand the emerging shifts and patterns in consumer behavior, thereby helping you optimize your product offerings and marketing strategies.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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More From Forbes

Understanding the most critical part of your ransomware response plan.

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Mickey Bresman is co-founder of Semperis . Leads the company’s overall strategic vision and implementation.

All too often, when a company is breached, the bad actor, through various techniques, escalates privileges until they get ahold of an account such as a domain admin.

The bad actor can then download an encryption payload (otherwise known as malware) to encrypt the environment to demand ransom. To increase the likelihood of being paid, the bad actor often locates the backup system and encrypts it, thereby making the recovery process extremely painful. Once the backup system is encrypted, the bad actor is able to move on to encrypt the production environment and demand ransom.

The following is a step-by-step walk-through of the crucial tasks that aid in protecting the backup and recovery systems from ransomware. By following these steps, security leaders can improve their company’s responses to ransomware attacks and ensure recovery runs smoothly.

Analyze The Attack Paths

To encrypt your backup and recovery system, a bad actor first needs to access it. The first step in ransomware defense for the defender, then, needs to be attack path analysis and reduction.

Most attack path analysis tools are built from the point of view of an attacker. These tools typically focus on analyzing only the identity systems. Here, you need a defender-oriented attack path analysis capability for backup and recovery systems in line with a “permission-defined perimeter” approach.

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First, map out the backup and recovery system components. Most backup and recovery systems have several components, such as a management server and distributed backup storage devices. Make sure that your organization is fully aware of the different components that comprise your backup and recovery solution.

Second, analyze which users in the environment have access to the backup and recovery components and in what way. In most organizations, access to resources is not granted to a user directly, but instead is assigned to a group that the user belongs to. As many backup and recovery systems have different components, you should expect to find different groups with different permissions in the system based on the responsibilities they have (for example, backup operators versus administrators). During this step, map the groups to users and analyze the type of access these users have. Look for direct user permissions as well.

Third, reduce the number of users that have access to the backup and recovery system. During this step, review the mapped users and analyze whether they indeed need the access they’ve been given or whether their access can be reduced to a less privileged one. Through this process, you reduce the attack surface available to bad actors. The result of this activity defines the backup and recovery system tier.

Expand Attack Path Analysis

You now have a defined backup and recovery tier and have reduced the users who are part of it. Next you want to determine who can become part of your backup and recovery tier and how.

When analyzing who should have access to your backup and recovery tier, consider this scenario: David is a backup and recovery administrator and belongs to your backup and recovery tier. Sarah is part of help desk operations but doesn’t have a role in the company’s backup and recovery process and is not part of the backup and recovery tier. But Sarah can change David’s password, so Sarah can become part of your backup and recovery tier in just one hop, thus negating her unauthorized access status.

We refer to the ability of a user to modify a group or another user as having a strong relationship toward that object.

By mapping out these relationships, you can take two optional actions. You can either remove the relationship between Sarah and David by removing Sarah’s ability to modify David’s password, or you can accept the relationship and set Sarah to be part of “Tier 1” with regard to your backup and recovery system. (Tier 0 includes objects, users and groups that are directly part of the backup and recovery system. Tier 1 includes objects that have a strong relationship toward those Tier 0 objects.)

If you choose to accept the relationship between David and Sarah, you might want to have another look at the objects that have a strong relationship toward Sarah. These objects are just two hops away from David and effectively compromise your backup and recovery system.

The main goal of the second step is to reduce the number of objects that have access to your backup and recovery tier, directly or indirectly.

Monitor For Changes To The Tier

Once you have achieved the desired state by executing the previous steps, the final step in securing your backup and recovery tier is to monitor the environment to make sure that no changes to your desired state occur without your awareness and approval.

To achieve this goal, you will need to export the configuration of the objects in Tier 0 and Tier 1 of your backup and recovery system and import the results into a real-time monitoring solution, which can then be used to set relevant rules, monitor for changes in the permission structure and notify employees about relevant changes.

Speedy recovery of your identity systems is a key factor when dealing with a ransomware threat. Protecting the backup and recovery system from bad actors helps to ensure that recovery runs smoothly. Understanding who has—and who should have—access to the most sensitive tiers of that system is an excellent first step in the process.

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Average 401(k) balance by age

Average 401(k) balance by income level, average 401(k) balance between men and women, average 401(k) balance by industry.

• 401(k) strategies for success
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Average 401(k) Balance by Age in 2024: Benchmarking Your Retirement Savings

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• The average 401(k) balance is $112,572, according to Vanguard's 2023 analysis of over 5 million plans.
• But most people don't have that much saved for retirement.
• The median 401(k) balance is significantly lower at $27,376, more reflective of how most Americans save for retirement.

A 401(k) account is an employee-sponsored retirement vehicle that allows you to contribute pre-tax income toward your retirement. As one of the best retirement plans for US employees, a 401(k) lets you reduce the amount of income you're taxed on and lets your funds grow tax-free.

Every year, Vanguard analyzes account data from millions of retirement accounts in a report titled " How America Saves. "

Knowing the average 401(k) balance by age group and income level can help you determine how much you need to retire . Here's the average 401(k) account balance based on age in 2024. 

Understanding the average 401(k) balance in 2024

According to Vanguard's annual data report, the average 401(k) account balance in 2024 was $134,128, an increase from 2023's average balance of $112,572. 

Across these accounts, the typical account balances vary widely by the method used to calculate it — while the average 401(k) savings balance is well over $100,000, the median account balance is much less at $35,286, according to Vanguard's latest data.

The Vanguard data is broken down by demographics, showing a wide range of average account balances across various age ranges, income levels, industries, and genders. Here's a breakdown of those balances.

Retirement savings grow with compound interest , which means account balances increase with time. Like other types of retirement accounts, money saved in a 401(k) grows like a snowball, with interest earning interest on itself. The older you are, the more time you've had to build up your savings.

With compounding interest, the earlier money is put into an account, the more opportunity it has to grow and the greater the possible returns. In retirement accounts like 401(k)s, building retirement savings early means a greater opportunity for growth. 

According to Vanguard, here's the average amount people have saved for retirement by age group. 

Check out Personal Finance Insider's retirement calculator to see how much of your annual income you can afford to put away. 

Ages 20-29: Laying the foundation

Most 20-year-olds are just starting to contribute a small amount of money toward a 401(k) or equivalent retirement plan. Between lower salaries, rent payments, student loans, and other living expenses, younger individuals typically can't contribute much toward retirement. But that's okay as folks in their 20s have time on their side.

Contributing a little here and there is better than nothing at all. 

Ages 30-39: Building momentum

People in their 30s often have increased financial freedom to put more money toward retirement. Contributions should be increasing annually. However, you may be distributing funds between different savings and investment accounts if you're planning for other big life events like having kids or buying a home.

This a good time to make calculated risks, as you still have time to recover from larger losses. 

Ages 40-49: Mid-career financial growth

Folks in their 40s should be contributing a much larger portion of their income toward retirement. Aim to maximize your contributions and take full advantage of employer benefits like 401(k) matches. Start shifting your investment portfolio to a more conservative risk tolerance so that a larger percentage of your money is invested in low-risk bonds and other fixed-income securities. 

Ages 50-59: Preparing for the transition

As you near retirement age in your 50s, take advantage of catch-up contributions, maximize your 401(k) savings,  and avoid high-risk investments. Finalize your retirement goals and continue storing as much as possible in a retirement account. 

You might also consider adjusting your retirement timeline. Pushing back your retirement date allows you to put more of your employment income aside for retirement and may increase the amount you receive in Social Security benefits.

Ages 60 and up: Finalizing the retirement strategy

Adjust your investment portfolio as needed, and make sure you understand the tax implications of withdrawing funds. Depending on your retirement account type (traditional or Roth), you may have to pay taxes on your withdrawals. Moreover, your portfolio should be adequately adjusted for stability and should provide a steady source of reliable income. 

Vanguard's data shows that 401(k) balances are greatly influenced by annual income. Across all age groups, the amount people save for retirement increases with their earnings. However, households with a higher annual income had lower average and median 401(k) balances than in previous years. 

Here's the annual income compared against the average 401(k) balance and median 401(k) balance:

On average, men save more for retirement than women. 

Across all age levels, Vanguard's data indicates that women have a median 401(k) account balance of just over $11,099 less than men's.

A 2023 report from the Bureau of Labor Statistics shows that the average woman makes around 86 cents for every man's dollar, which affects how much women can put away for retirement.

While a large disparity in savings exists, women often need greater retirement savings than men to retire comfortably. Women tend to live longer and, therefore, need more long-term care than men, which could require greater spending in retirement.

Balances also vary widely among industries. One possible explanation is that employer match benefits, in which an employer matches an employee's contributions to their savings up to a given percentage, may be more common in some industries than others. Earnings could also affect how workers in a specific industry save.

Here's how the average balances break down by industry.

People who work in agriculture, mining, and construction contribute significantly to retirement, with the average industry worker's account balance well over $180,000. However, teachers, healthcare workers, and people who work in wholesale and retail tend to lag behind, with average account balances under $97,000.

Enhancing your 401(k): Strategies for success

1. start early, contribute often.

Time is a crucial part of financial planning for retirement. Contributing money toward retirement savings allows compound interest to work magic and combat inflation. Even modest contributions can grow into significant savings over time when deposited regularly. 

Ideally, you'll be able to contribute more as your salary increases and your financial situation improves. However, ensure not to over-contribute and lose access to money you'll need shortly. Setting aside cash in an emergency fund is a great way to avoid a 401(k) early withdrawal before your 59 1/2.

2. Take advantage of employer-match benefits

A common benefit with 401(k)s is an employer match benefit, and it's essentially free money. Employers can match a dollar-for-dollar or partial match of an employee's retirement saving contributions. If you can swing it, contribute enough to unlock your employer's full contribution amount and hit your retirement saving benchmarks. 

Under the Secure 2.0 Act, employers can now offer a student loan match to their employees' retirement savings plans when they make qualifying student loan payments. 

3. Diversify investments

Diversifying your investment is key to managing risk and volatility in your portfolio. Investment diversification in a 401(k) may also boost growth by getting exposure across multiple market sectors and different kinds of assets.

You can easily diversify your investment portfolio by investing in different stocks, bonds, ETFs, mutual funds, and alternative investment options like real-estate and commodities. 

4. Mind the fees

High management fees can erode your savings over time. Pay attention to the fee schedules and manage 401(k) fees in your plan by investing in low-cost funds like ETFs. If you have an old employer's 401(k) plan, consider rolling over the assets into a new IRA because IRAs vs 401(k)s offer lower fees and more investment opportunities. 

5. Regular rebalancing

As the market fluctuates, so will the composition of your investment portfolio. Your age and proximity to retirement also influence how your portfolio should be allocated. Regular rebalancing is key to keeping your investments on track and maximizing your 401(k) contributions to reach your goals and stay aligned with your risk tolerance. 

Conclusion: Your 401(k) is your future

A 401(k), 403(b), or other retirement plan is more than a savings account. Retirement savings plans are a wealth-building tool to ensure a comfortable, secure, and stress-free retirement. By understanding how age, income, and gender impact your retirement savings, you can make better-informed decisions that align with your demographic and investment goals. 

But you'll need a well-thought-out financial plan before you can reap the rewards of your retirement savings. Consult a financial expert like a fiduciary or CFP for professional management and guidance. 

Average 401(k) balance FAQs

How much you should save in your 401(k) varies by age. You should aim to save 1x your annual salary by 30, 3x by age 40, 6x by age 50, and 8x by age 60. The best way to reach these age markers is by starting early, consistently contributing, and adjusting based on income, lifestyle, and retirement goals to ensure financial security. 

The average 401(k) balance varies by age. Generally, individuals under age 25 have around $7,000 in retirement savings, and individuals between 25 and 34 have around $37,000 in retirement savings. People aged 55 and 64 have around $244,000. 

Improving your 401(k) balance over time involves several key strategies. First, consistently contribute to your 401(k) to take full advantage of compound interest, aiming to contribute at least enough to get any employer match, if available. Consider increasing your contributions gradually each year, especially when you receive a raise. Diversifying your investment portfolio is essential to spread risk, so invest in a mix of stocks, bonds, and other assets based on your risk tolerance and retirement timeline. Regularly review and adjust your 401(k) investments to ensure they align with your retirement goals and market conditions.

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