If you’re a self-employed professional starting a new business or expanding the one you have, developing a written plan is a valuable first step. You’ve heard about business plans, but did you know there is more than one type? Depending on your situation, you may need a complete business plan, a simple business plan, and/or an action plan, which is not at all the same.

Creating a business plan

A complete business plan is typically written for the following reasons:

• To help you think through exactly what your business will offer.
• To assist you in evaluating your idea before you get started, including finding out if there is a viable market for your product or service, whether it can make a profit, how long it will be before you are profitable, and how much money you need to begin.
• To estimate targets for sales and expenses, so you can measure whether you are on track to profitability as you proceed.
• To prove and document the viability of your business to others, such as potential lenders, investors, partners, vendors, or landlords.

The most common reason for writing a complete business plan is to obtain financing. If you don’t need to convince anyone other than yourself that your business is viable, you don’t need a complete plan. You can write a simple plan instead.

While both types of plan allow you to evaluate your business or idea, the simple business plan typically has less detailed financial projections, and doesn’t include any documentation. Most books and software designed for business planning will tell you how to develop either a complete plan or a simple plan.

Developing an action plan

An action plan is quite a different animal. Writing a business plan is just one of the projects you should consider including in an action plan. An action plan is written to help you:

• Figure out exactly what needs to be done and in what order.
• Determine when each step is needed and what resources it will require.
• Prioritize tasks that use limited resources like people, time, and money.
• Perform a reality check on what can be accomplished with the resources available.

An action plan doesn’t necessarily have a formal structure. It contains whatever elements you need to keep track of what has to be done. It might include any or all of the following:

• Statement of your overall goal
• Descriptions of projects or milestones
• Project calendar
• Inventory of needed resources (e.g., people, hours, or money)
• Detailed action plans for each major project

You can begin your action plan on paper, but a digital system will be more flexible and powerful. You could use a spreadsheet if you’d rather not learn any new software. For simple action plans, a spreadsheet may be all you need.

For an action plan with lots of moving pieces, though, a project management app will be a better choice. Check out solutions like Trello, Asana, or Basecamp.

Setting up your action plan

Begin your plan by stating your goal in specific and measurable terms: “To launch a career coaching practice with at least five paying clients by September 1st, 2023.”

Next, list the major projects or milestones that must be accomplished to achieve your goal. For a coaching practice, the project list might include writing a simple business plan, building a website, outlining a marketing plan, designing client intake materials, and establishing a payment process. Include a project calendar that shows when each project should begin and end, and a list of resources each project requires.

Create a category, label, or worksheet for each project, and include for each a list of every task you can think of that needs to be done. Put your task lists in chronological order and assign start dates and due dates to them. If you’ll be using other people to help complete tasks, include the name or job function of the person who’ll be assisting you.

Once your plan is in motion, transfer upcoming tasks to whatever system you use to plan your week or day, such as a calendar app or daily planner. With some apps, creating daily or weekly to-do lists like this can be done automatically.

Don’t put off making an action plan because you’re not sure what all the pieces will be. Your plan will change over time as you learn more. But having a plan to begin with will get you into action. Then you can start finding out what it is you don’t know yet.

This post was first published in 2014 and has been updated for 2023.