Many entrepreneurs write a business plan only when they need to secure start-up financing. However, your plan is far more than a document for banks and investors to read; it is first and foremost, your business’ first operational document. A business plan is a document that summarizes the operational and financial objectives of a business and contains the detailed plans and budgets showing how the objectives are to be realized; the road map to the success of your business. It is helpful in ensuring that you communicate your vision and that everyone is on the same page. It also helps you benchmark and check your progress as the company grows.
A business plan is crucial in getting support for your vision because it communicates that you have clearly thought through your idea and are not just winging it. What exactly does a business plan entail? Let me walk you through the basics and must haves of a business plan.
1. Executive summary
This is the doorway to your plan. After going through your executive summary, your target reader will either throw away your business plan or keep reading it, so you better get it right. It’s your first chance to make a good impression.
This summary provides a condensed overview of your company and where you’d like to take it. Concisely describe what your company does. Summarize the problem you are solving for customers, your solution, the target market, the founding team, and financial forecast highlights. Keep things as brief as possible to entice the readers and make them want to learn more about your company.
2. Market analysis
Your purpose here is to show the reader of your business plan that you have a thorough knowledge of the people you are planning to sell your goods and/or services to. Here you include detailed target market statistics and research. Use this section to discuss your customers’ needs, where your customers are, how to reach them and how to deliver your product to them. Show that you understand your market and understand where your best prospects lie. Include your competition, how you’ll differentiate your products or services, and your products’ or services’ unique selling proposition. You should also include information on each of your sales strategies such as digital, print, direct sales etc.
3. Financial projections
What will your business accomplish financially over the next three to five years? This section should include your projected profit and loss and cash flow tables, and a brief description of the assumptions you’re making with your projections. Potential investors, creditors and business partners will want this information so that they know they’re making a good investment with your business. If you are creating the plan to get immediate funding, you need to include a formal funding request and specify how much capital you need now and in the future.
4. Your team
This section tells the reader about the structure of your business and who in the company is responsible for what. You should ensure that you explain how each member of your staff adds to the success potential of your business. Also project what future positions you see as important to grow your business in the coming years.
5. Service or product line
Expand on your products and services including features, benefits and competitive advantages. You should also include any associated patent or trademark information or research and development activities.
6. Risk analysis
This section informs the reader about internal and external threats that may stand in the way of achieving planned results. There are three main kinds of risks:
· General risks
Some potential threats can include problems that can develop during marketing, quality control, distribution and other areas.
· Industry specific risks
One major challenge is the issue of industry competition. Your business plan should address what your business can do to compete effectively. It is important to discuss marketing strategies while also discussing major competitors and identifying their strengths and weaknesses. Your action plans to deal with the competitions should also be provided.
· Company specific risks
There are risks and uncertainties associated with different companies. The risks are different depending on which stage the company is in. Start-ups will often have issues when it comes to obtaining start-up or working capital, which effectively affects operations.
Businesses change to reflect the current economy and fluctuating market trends. As it grows, revisit and revise your business plan.