You have a great idea to start a profitable business, but you aren’t totally sure where to go. Well, one of the most important things to do with your idea is to write out a business plan.
What is a business plan?
A business plan is similar to a roadmap as it guides your business and outlines your goals, along with how you intend to achieve them. It’s a document that should provide clarity for finance, operations, marketing, and all other aspects of your business.
Why is this important?
Business plans are vital documents as they enable you to move forward with your business idea. As well as serving as a guideline for how you will build, structure, and grow the business, the plan will be read by venture capitalists, bankers, potential business partners, and nearly anybody else that may be able to help you along the way. If you need funding, investors will read your plan to gauge whether it’s worth investing in your business; therefore, it is vital to have a killer business plan. Once you have your business plan you can start working on your pitch deck.
How to get started:
If you plan on using a business plan template, you need to know what components go into one. Below are the key parts or sections that should be included, but keep in mind that all businesses and correlative plans differ so that which must be included can vary:
Here are the nine parts to a successful business plan:
- Executive Summary
- Company Description
- Market Strategies
- Competitive Analysis
- Management and Operations Plan
- Product Explanation
- Marketing Plan
- Funding Request
- Financial Projections
The executive summary should be presented first in a business plan. It explains what you would like to accomplish as a business and should include your mission statement, a brief explanation of the products or services you will provide, and a description of why you are starting this business.
As this is an overall summary of the rest of the plan, it is smart to write this portion last to better encompass the following content, but it should always be presented first.
Your company description should include the specifics regarding your company. It includes important information about the business, customers that you intend to focus on, and goals that you have for your business. This portion should discuss the unique factors that make your business and/or product differ from others in the market, as well as the benefits that they will provide for your target audience.
What does the market you are going to enter look like? This portion should be the result of in-depth market analysis and should enable the reader to become familiar with the present state of the market, the future outlook of the market, and how your product will fit into a certain segment to accumulate its share of sales. Target audience details should be included as well, such as demographics and psychographics.
This section should be chalked-full of data, statistics, and charts to best represent the market. Without data to support your analysis, the strategies you intend to implement will be meaningless.
The purpose of this section is to share a clear comparison of your business with the competitors in the market and should include both direct and indirect competitors. You will need to determine the strengths and weaknesses of each competitor, what tactics may provide your business with an edge over the competition, and any barriers to entry that you may be able to implement to discourage future competitors.
This portion will require in-depth research to determine your competitors and key aspects of their businesses. SWOT analyses are highly encouraged to demonstrate valuable information about your competition.
Management and Operations Plan:
This segment is designed to share how your business will be set up and function. If company managers are known, you should introduce them here and speak about the skills they will bring to the table, as well as what they will be responsible for. If positions are not filled yet, describe the management positions and what duties each manager should fulfill in said roles. All necessary expenses for operations of the business should be included and a chain-of-command may be helpful to present if applicable.
You should also state the business structure of your company, the most common forms being a sole proprietorship, partnership, corporation, and limited liability company. Include the justification behind this decision and how it will benefit your business.
Though information should be included about the product and/or service you provide in the Company Description section, this is where you go more in-depth about the specifics of what you provide. You should include the product’s design, the development process in terms of production, and all important information regarding what you are bringing to the market. Readers should understand exactly what you are creating, how you are doing so, suppliers that may be involved, the lifespan of the product, how they serve to fulfill a need, potential intellectual property issues or opportunities, and all other vital information concerning your product and/or service.
It is important to demonstrate how you plan to share your product with your target audience and how you plan to catch their attention. At the end of the day, marketing is all about getting your product or service in front of potential customers. This section should explain the necessary steps to market your product, the budget that these steps require, and justification behind your decisions regarding the 4 P’s (Product, Promotion, Price, Place).
This section is not necessary, but for a start-up company or a non-profit organization, this can be very important. If you are in need of funding, you can utilize this section to share how much money you are searching for and how you intend to raise this capital. If you will need cash in the near future for any reason as well, it is important to state that.
All financial data will appear at the end of the business plan, despite it being just as important as all prior information.
This portion should include all goals and expectations you have financially for the business based on market data and research. You will want to include your 12-month revenue projection and expectations for the next 5 years. This section should be backed by data as well and have no apparent bias.
At the end of the day, every company differs and carries different requirements. This list is by no means an end-all-be-all for every entrepreneur, but it serves as a guideline to follow while working through creating a business plan.
If you feel the need to add/remove something from your plan, you are fully able to do so. Be sure to write concisely while providing the most important information in an easily visible manner to not make the reader dig for it; yet, be careful of not providing enough information. Business Plans vary in length so be sure to be as thorough as possible but do not get too in the weeds.