All business plans are definitely not created equal. Don’t believe the experts who treat a business plan as a standard thing, with components that must be included. That’s just not true. Most of the lean business plan applies to all businesses. However, the more elaborate formal business plan should exist only to deal with a specific business plan event. Assess your specific business plan needs as you go.

A Lean Business Plan May Be Enough

If you don’t have a business plan event, stop here. Don’t do all of this extra work. There is no business purpose. Do your lean plan and stick to the lean planning process.

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Business plan events aren’t equal either. Make sure you understand the real need for your specific business plan event. Your lean plan alone may be all that you need. You may not have to do the elaborate business plan document at all. Maybe you decide to combine your lean plan with a pitch presentation or summaries. Always know who will read your plan and what they’ll be looking for when they do.

Who Will Read Your Plan and What They’ll Look For

Investors Read Summaries First. They Take Steps

Investors review a summary memo or executive summary, not the whole plan. If they like the summary, then they’ll look for a short pitch. If they like the pitch, then they’ll want a full plan to use for due diligence. And sometimes the lean plan is enough for due diligence purposes, without the elaborate plan.

Always keep the summary, pitch, and latest plan (lean or elaborate) aligned so they all say the same thing, but for different media.

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Know What Investors Look For

Investors normally want to see potential growth, scalability, barriers to competition, exit strategies, and a management team with relevant experience. If the lean plan isn’t quite enough (ask your investors), then even the elaborate plan has to be relatively short in text; 20-30 pages maximum, and 10-15 pages of text is okay. Tables, projections, illustrations are always welcome, and they don’t add to the page count. And also, a 30-page plan with 15 pages of tables and illustrations is shorter than a 20-page plan with no tables or illustrations.

Bankers Look Mainly at Financial Stability

Bankers want to see the company legal details and serious past financial results, along with a fairly standard description of the business, product, market, and team. They’ll also want to see the business owners’ personal financial statements. And they like a good executive summary so they don’t have to read the whole plan, just leaf through it to find the financials. Bankers are much more likely than investors to expect the full plan document, not just a summary, and not just a pitch.

Academics Usually Want a Full Formal Business Plan

Academics want a complete plan with detailed market and industry analysis and sophisticated financial analysis such as NPV (net present value) and IRR (internal rate of return). I won’t define either of these here because if you’re in the academic mode you have plenty of information on that already; and if you aren’t, you don’t need them. Real investors and bankers pay no attention to either of these analyses.

Applying at a commercial bank for a government-guaranteed SBA (Small Business Administration) loan requires a standard business plan covering the standard topics, from summary to financial projections.

These are just a few examples. And there are also plans related to new expansions inside larger companies, divorce settlements, retirement and estate planning, selling a business, valuation for tax purposes, and other business plan events.

Tip: “Business plan” means different things to different people. If you’re not sure what’s required for a specific business plan event, ask. Ask a person who will be reading the plan. Ask for a sample of one they like. Ask what format, how long, what it should cover. You shouldn’t have to guess.

Several variations on a business plan might be relevant to you and your specific business needs. There are several varieties of business plan outputs. The lean plan, the traditional plan, summaries, pitches, and so forth. Obviously, if you don’t need it, don’t do it; but here are some variations that come up often:

Common Business Plan Outputs

1. The lean business plan. Don’t assume you necessarily need the elaborate business plan even if the goal is presenting for outsiders. Times are changing. For investors, the lean plan might be all you need. Investors normally they deal with your summary and pitch before they see the plan.
2. The traditional business plan document. It starts with executive summary. It has chapters describing the company, its market, its business offering, strategy, management team, and financial projections. It’s often a printed document. It can also be an electronic (usually PDF) document or even a website (presumably protected by password to protect confidentiality). For more on that, turn to
3. The pitch presentation. Think of startups pitching for investment. It’s a slide deck to be narrated and used as background for a talk. It includes taking as few as 10 and usually 20 to 30 minutes, even more when things go well. The main pitch presentation is mostly pictures and business charts to serve as background and emphasis for a speaker. Sometimes people will create a leave-behind version, with more words. These can stand alone being read as a series of slides, without narration. For more on that, turn to Your Business Pitch later in this section.
4. The summary memo. This is a short text summarizing the main points of a business. Use it as an introduction to investors, bankers, or other outsiders. It fits into an email. The best of these are only a page or two long, and they rarely if ever exceed five pages. The summary memo is often almost identical to the executive summary, the first section of the business plan document. For more on that, turn to Developing Summaries later in this section.
5. The elevator speech. A very short monologue. The well-known business plan competitions that feature elevator speeches limit them to 60 seconds. For more on that, turn to Your Elevator Speech later in this section.

And these are not the only business plan outputs

There are also some common variations on these main themes. For example, some people recommend a “one-page business plan,” which is really a variation on the executive summary. And there is a variation on the pitch presentation that is effectively a wordy slide deck. This one can stand alone, to be read. I prefer to call a “leave-behind,” or “leave-behind slide deck,” or “summary deck.”

Don’t think a pitch presentation or summary deck can replace a business plan. This idea stems from the Lean Startup rejection of the “elaborate” business plan. Furthermore, it has become cool for successful entrepreneurs to claim they didn’t start with a business plan. And also some investors like to claim they don’t read them. It’s like it’s cool for successful people to claim later that they never studied in school – whether that’s true or not. But even the lean startup authors agree that all businesses need strategy, tactics, milestones, priorities, and sales and expense and cash flow projections. And pitches and summaries should be business plan outputs, not replacements.

Important: A lean plan alone might well be enough, without the full elaborate plan, to serve a business plan event, especially when it is communicated along with a good summary and good pitch deck.

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The Problem of a Pitch Without a Plan

The most serious problem with using only a pitch instead of a plan happens, ironically, if the pitch is successful. Interested investors will almost always respond to a pitch with additional questions, and they are disappointed and discouraged when the entrepreneurs can’t answer those questions in depth, with projections, from the context of a real business plan. However, for this use, the simple lean business plan may be enough.

However, it is also true that sometimes, for entrepreneurs they know and trust, investors will fund a startup that doesn’t have a formal business plan. I’ve had real experience with this, from close up. Also, professional investors will invest in ongoing high-growth companies based on formal financial statements and demonstrable traction, plus team credibility, without requiring a formal business plan. Furthermore, investors quite frequently reject a deal without ever reading a business plan, just from a summary or pitch presentation. The business plan becomes important for deals the investors like, especially during the due diligence process. Here too, however, the simple leans business plan may be enough to meet the need.