Traditional or Lean Business Plan?

Business plans serve two main objectives: first and foremost, to convince financiers or investors to provide the funding needed by businesses; and second, to help entrepreneurs strategically plan the growth of their operations. These plans fall into two main categories: the traditional business plan and the lean business plan, as explained below.

1. The Traditional Business Plan

This type of business plan includes the following main sections:

• Executive Summary

This first section is the most critical, as it must immediately capture the interest of busy bankers or investors. If it fails to do so, they are unlikely to read the rest of the plan. The executive summary should be brief (1–2 pages maximum), concise, compelling, and informative. Although it appears first in the document, it should be written last, after all other sections have been completed.

• Soundness of the Management Team

Bankers and investors often value the management team of an enterprise as much as, if not more than, the business idea itself. They want to know if their money will be in capable hands. This section should highlight your team’s strengths and trustworthiness. Demonstrate that your team is capable and multidisciplinary by presenting their academic and professional qualifications, industry experience, relevant achievements or awards, and overall track record.

• Market Prospects / Unique Selling Proposition (USP)

In this section, you must explain your competitive advantage and unique selling proposition. Justify convincingly how your products or services address significant problems faced by a large segment of dissatisfied customers within a growing market.

Modern financiers fund only viable businesses with a clear ability to repay their obligations, while investors are driven by a single, non-negotiable goal: a high return on investment (ROI). These expectations can only be met by fast-growing, profitable businesses, businesses built around loyal and satisfied customers.

• Realistic five-year Financial Projections of Sales, Profits, and Cash Flow

Existing businesses should base these forecasts on realistic assumptions, using data and financial ratios derived from their most recent audited financial statements as well as from appropriate market research and industry trends.

Startups, which may not yet have audited financials or management accounts, must also provide such financial projections. In their case, the key is still to remain realistic and to ground forecasts in credible, evidence-based assumptions.

Bankers and investors are not looking for blind optimism, but rather for well-researched, justifiable projections, supported by solid market analysis and customer feedback, and not just by the technical ability of the enterprise to deliver a “perfect” product or service.

Additionally, avoid complex or overly technical language. If your business is difficult to understand, particularly for non-expert investors or financiers with limited time, your plan is less likely to be considered. This is why knowing what to include in a business plan is just as important as knowing what to leave out.

• Exit Strategy

When pitching to investors or submitting a business plan, one of the most common questions they will ask is: “What’s your exit strategy?”

Including this section is essential, as it demonstrates how investors will eventually realise a return on their investment. It outlines the path you intend to follow to provide them with an exit, whether through a business sale, merger, initial public offering (IPO), or otherwise.

Having a clear and well-thought-out exit strategy reassures investors that you are forward-thinking, strategic, and committed to building a business capable of growth and long-term success.

2. The Lean Business Plans

What is a lean business plan?

While a traditional business plan is 20–30 pages long, a lean business plan is only one to two pages long, about the same length as the executive summary of a traditional plan.

It includes the following key sections, usually presented in bullet point form:

• The problem your business solves (i.e. your value proposition)

• Your target customers

• What makes your product or service offer greater value for money than those of your competitors

• Your pricing model (how much you will charge) and your cost structure

  
  

The lean business plan highlights only the most salient points of your new product or service. More specifically, it focuses on how to quickly enter the market by developing a Minimum Viable Product (MVP) and expanding from there through continuous learning and customer feedback-based adjustments.

Therefore, while traditional business plans are useful for established businesses seeking funding from banks, financial institutions, or grant programmes, lean business plans are more suitable for start-ups seeking equity funding from business angels or private investors. Those plans are short, action-oriented, and designed to help startups secure early-stage funding before unforeseen market or technological shifts threaten their operational success.

3. Traditional or Lean Business Plans?

Which approach is best for your business: a traditional or a lean business plan?

The choice depends on the nature, goals, and stage of your business. If you’re a start-up operating in a competitive market or pursuing a time-sensitive opportunity, the lean startup approach may be more appropriate. Conversely, a well-established business with a proven track record can often afford a longer development phase, making the traditional business plan more suitable and beneficial.

It is important to clarify that you are not restricted to using only one approach. Many startups begin with a lean business plan for quick market validation and then develop it into a more detailed traditional plan as the business grows. Alternatively, some businesses condense an existing traditional plan into a concise lean version for specific use cases (e.g., pitching to investors).

Regardless of the model you choose, having a business plan of either type increases your chances of success. Studies indicate that businesses with a well-prepared plan are 30% more likely to experience sustained growth. The planning process itself helps clarify your goals, define your strategy, and anticipate potential challenges.

A well-crafted business plan is a key tool for securing funding and safeguarding the long-term success of your business. If you're ready to take your business to the next level, our team at GrantXpert Consulting Ltd, with numerous proven successes in Cyprus and abroad, can help you prepare a business plan that addresses your funding needs.

About our expert Antonis Hadjichristodoulou

With a distinguished 35-year career at the Bank of Cyprus in senior management roles, and academic experience as a lecturer in Banking and Finance at a leading business school in Cyprus, Mr. Antonis Hadjichristodoulou has evaluated the viability of major business projects across a wide range of business sectors.

He holds a B.Sc. in Economics from the London School of Economics and an MBA from City University London. For the past 13 years, he has served as Head of Financial Consulting Services at GrantXpert Consulting Ltd, where his business planning expertise has helped numerous local businesses and NGOs secure funding from both national and EU programmes.

As an accredited HRDA (ANAD) instructor, Mr. Hadjichristodoulou also contributes to the organisation and delivery of subsidised seminars and webinars on a variety of topics and programmes, supporting the sustainable and profitable growth of SMEs and large corporations.