A business plan is a document that you will create to lay out your goals, strategy, and vision for your company. It includes all the information needed to start up and grow a business: income statements, cash flow projections, balance sheets, market analysis, sales forecasts, and much more. The creation of a business plan can be one of the most difficult parts of starting any new venture; but with so many resources available (including this blog!), there are plenty of ways you can get help along the way!
Entrepreneurs should view a business plan as more of a roadmap than just an investor’s assurance. Though a business plan may benefit you financially, can benefit you in many other ways, as well. A business plan helps you to gain a deeper understanding of the work required to sustain your business. And while your mission and vision may seem like a guide, it really does not show the work or costs associated with fulfilling the mission or the details to ensure your vision is a realistic one.
Have you ever wondered what goes into a business plan? The truth is, it takes more than just hard work, creativity, and innovation to make your idea succeed. It also requires planning. Here are some of the critical elements of a good business plan:
1. Executive Summary
A business plan executive summary is a one to a two-page overview of your company that highlights a brief description of your business and business products or services, how it operates or will operate (strategy and goals), financial status and plans, how you will make money, and why customers should buy from you (or show the competitive advantage of why in investor should provide capital to you).
A well-written executive summary should be compelling and articulate the opportunity for a company to become sustainable and marketable. Even if you do not want investors, write it as if the goal was to get potential investors excited about what you have to offer. After all, it is the first part of the business plan they get to read. It is the make or break of the document. It is your image and the image of your business and brand.
The strength of a business plan is not only about the business, product, or service. The biggest strength is the person or the people behind the business. Management is the guide behind any implementation and execution mentioned in the business plan. He/She/They are the decision-makers and is/are responsible for the success or failure of the business.
This is why this section is also the key. It outlines the years of experience of the management team. If a sole proprietor, a more thorough background should be given to ensure investors are aware that even as a one-man management team, you are able to provide the long-term sustainability of the business.
If more than one management team, each team member should have a brief bio of experience; as well as the role each member will hold in the company. If a partnership, it is vital to provide the amount each stakeholder will have in the business.
3. Product Description
A business plan will be considered incomplete without a touch of your product. No matter what products or services you provide, you should discuss them in your business policy. What is its purpose? How will you market them? What are you expecting from their launch? How will they be any different from what’s already present? What will be the target market? These are all the questions you need to answer in your plan.
4. Target Market Analysis
If you’re trying to plan a new business or looking for ways to improve your current one, it’s important to know what the market looks like. Trust me, every entrepreneur starts their business with a market analysis (or I hope they do). So, the first step is to do thorough research about the market you are entering. There are many factors to take into consideration when conducting a market analysis, but the most important is understanding your customer’s needs and what they want (not just who they are).
You will have to analyze different age groups, social classes, educational backgrounds, salary considerations, ethnicities, and or any other demographic information that will perfectly suit your product or service. Further, you should also keep an eye on your competitors in the market. They could prove to have an advantage you are not aware of that could affect your bottom line sales.
5. Sales & Marketing Strategy
The key to any successful business is sales and marketing. A lot of people think that sales and marketing are the same things, but they’re not. It’s not enough to have a great product; you need people to know about it. Sales are all about making a sale – it’s in your company’s best interest to get as many customers as possible so that you make more profit on every one of them.
On the other hand, marketing is focused on getting your product or service out there so that potential buyers will be aware of what you have available. Marketing also involves building relationships with current customers by providing value beyond just making a purchase; people want to feel like they’re getting something from their purchases too rather than just exchanging money for goods or services.
Your business plan needs to include how you intend to make your product a success in detail. Your business strategy should highlight how you plan to do it and how you will track your performance or progress.
6. Financial Projections
If you want to attract big investments or collaborations with your company, you’ll need to show how your company is worth it. For this, share how your organization will be operating in the coming years and include financial projections like sales targets, profits amounts, and revenue. Provide these numbers as a goal for the future, but keep in mind that there may be setbacks in the first year (though never expect much in the first year unless you are a celebrity or being endorsed by one).
That’s it! You now have all of the critical elements to ensure your business plan is well-rounded and leaves nothing out. Go ahead, take a deep breath and go put together everything that we’ve discussed into one complete document. It is one piece of hard work before launching your company to the world. Good luck with this next step on the journey toward success – you’re going to do great things!
Just a quick note, having an outdated business plan is the same as not having one. An outdated business plan can lack technological advances, SEO marketing opportunities, ROI risks, market strategies, and scare away potential investors. No one wants that so better to take a look at your business plan every 3 years (yes, three years!). A lot can change in three years and you want to ensure you look at your business processes and update the changes you have made as you have learned from trial and error.