No matter the kind of business you are venturing into you’ll need to explain why your business is necessary and how it’ll differ from its competitors in the marketplace.
That’s where your business plan comes in.
What exactly is a Business Plan?
A business plan is a blueprint of how a company will be run. It provides the business owner, the team, investors, lenders and potential partners with an understanding of the company’s goals and objectives.
A company often needs a business plan before it can have a clearly defined direction, projection and growth. It is also important for securing funding from investors and/or banks.
Good business plans are usually highly detailed and include information for all aspects of the business, including the industry, marketing, finance, personnel and various operating procedures. They are specific, communicate the company’s plans and goals effectively.
The discipline of writing out a business plan in an organized and compelling form helps an entrepreneur to get focused on the truly important aspects of the enterprise. Furthermore, it provides a roadmap on where the business intends to go so that an entrepreneur has a clear idea of the trajectory of the enterprise.
Now that we know what a business plan is and why we need one, let’s break down the key elements of a good business plan.
- Executive Summary: Begin your business plan with a synopsis i.e summary of the entire plan. Although it is always the first element of a business plan, the executive summary is written last. The one-page executive summary should include your mission statement, basics about when your company was founded and by whom, a description of your products or services, highlights of your growth so far, and a summary of how you want the business to grow.
- Company Description: This is where you elaborate on what you do (and the product or service you offer), who you serve, and why you’re different (and better) than the competitors. Think of this section as an extended elevator pitch that will help readers understand the what and why of your business. Describe what your business does, how that satisfies a need in the marketplace, the specific types of customers you serve, and any competitive advantages that have made or will make you successful.
- Market Analysis: This is the part where you do a deep dive into your industry. This is where you identify and provide details about your target market (size, historical and forecasted growth rates, demographics, needs, purchasing trends, etc.), and determine what share of that market you can capture.
- Competitive Analysis: Here you’ll assess the competitive landscape in your target market. What are their strengths and weaknesses? What are they trying to achieve? How do they market their businesses? What are the barriers you must overcome to compete and what opportunities you can take advantage of? Use this area to formulate a strategy to stand out from the crowd.
- Management and Operations: Lay out how your company operates. Include your organizational structure, ownership information, profiles of your management team, and number of employees. Even in very small businesses and sole proprietorships, you should include a detailed description of who does what in your business and provide background information for key players.
- Marketing and Sales: Explain how you’ll find and create customers by defining your marketing and sales strategies. For marketing, discuss your communications strategy as well as how and where you’ll share your messaging. For sales, focus on who will handle sales (and how you’ll train any outside help) and what tactics you’ll use to identify, attract, and convert leads.
- Financial Summary: Finish your business plan with information about your company’s financial health and future. You can include expected gross income or other financial predictions, but keep them grounded in reality. This is a good place to include income statements, cash flow reports, and balance sheets to outline your assets and liabilities. If you’re seeking funding, this section is critical and must be as current, accurate, and detailed as possible.
A business plan is an important planning tool, and provides a solid foundation for building a successful company. If you’ve been putting off writing one or if you haven’t updated yours in forever, invest in getting a professional and well put together Business Plan.