A business plan is important for several reasons. It shows potential partners and investors what you have to offer. It also helps you clarify your own needs and goals. Creating a solid business plan can be a daunting enterprise, especially if you've never done it before. You may be wondering what type of research you need to do, and what sections and information are essential. In this paper, we'll explain the necessary components of a business plan.
The executive summary is an overview, where you summarize the entire business plan. As it's the first section people will see, it's extremely important to make a strong impression and present a clear and concise picture of your venture.
- Company Description —The name and location of your business. Also describe who will be working with and for you, including any partners and employees.
- Mission Statement — This is a summary of your vision or mission for the business.
- Products or Services — What will you be selling? For example, will you be offering physical products or services? Examples of physical products include clothing, electronic devices, vehicles, furniture, foods, and toys. Services include legal services, hairstyling, medical services, accounting, consulting, and therapy.
- Business Model — Both products and services may be offered out of a physical location (such as a store, office, restaurant or salon), or online. For example, you can sell physical products out of a store, from an online store, or both. When describing your business, be sure to specify how you intend to sell your products or services.
- Target Audience — Explain the audience you'll be targeting. Discuss the size of the market and why it's likely to grow. You may have a broad or narrow audience which may be segmented by age, gender, geography, interests, income, or other criteria. In later sections, you'll go into more details but for now, provide an overview of your intended audience.
- Marketing Strategy —Describe how you'll be advertising and marketing your products or services. This may include paid advertising, SEO, traditional offline strategies such as billboards, video marketing, email, webinars, or any other strategies you'll be using. If your business will attract spontaneous foot traffic, such as a restaurant in a busy area, be sure to mention this.
- Competition — What is the scope and extent of your competition? Summarize how you will differentiate yourself and claim your market share. Discuss any advantages you'll have over your competitors such as higher quality, unique features, or a lower price.
- Financial Goals and Projections —Describe your financial projections for the next three years.
- Schedule —The time frame for implementing your business plan. State when you'll be ready to open for business.
Remember that, while the executive summary covers many facets of your business, it's an overview. Don't go into too much detail in this section. Now let's cover the business plan sections where you'll be providing more comprehensive information on the above areas.
- Who you are, your background, and the background and experience of your partners, management, and employees.
- The legal structure of your business. Are you a sole trader, sole proprietorship, limited company, or partnership? If necessary, consult with a commercial solicitor to determine the best structure for your needs.
- The products and services you'll be selling, including details such as suppliers or manufacturing process.
- A summary of your market. Your target audience and the demand for your products or services.
- Your business goals for the short and long term.
In this section, you provide a more detailed description of your products or services.
- A thorough description of your business model, with an emphasis on the benefits of your products or services.
- Your USP (unique selling proposition), which explains the advantages you have over the competition.
- Costs to create or purchase your supplies or finished products.
- How much you intend to charge.
- Include any relevant images, such as photos, blueprints, or diagrams.
A more detailed outline of your target market. If you have multiple demographics, such as for different products or services, list them.
- Statistics and trends regarding your industry that reveal the demand for your business. For example, if you're selling security software for businesses, you could include statistics on how your target market has been purchasing products in this sector, survey results on how security is a major concern for businesses, and expert projections on future threats posed by malware, identity theft, and computer viruses.
- Problems and solutions. Show how your business solves an urgent problem that your customers are willing to pay for. You can back this up with statistics, not only regarding your type of business but any products or services that address the same issue. For example, if you sell a weight loss supplement, spending on diet books and fitness centres are also relevant to your industry.
- Competitive analysis. Here you go into a more detailed exploration of your competition. Discuss their industry share. Discuss their strengths and weaknesses and how your approach will command a portion of this market share.
Sales and Marketing Strategy
In this section, include specific techniques you'll be using to find leads and customers.
- Tasks involved such as placing ads, SEO, content creation, social media, and other techniques you plan to use.
- Projected expenses for marketing and advertising.
- If your business will have sales reps, describe how many you will hire, their roles, and sales targets.
A summary of the funding that you need to start your business. This includes capital you plan to raise from loans, grants, crowdfunding, and other sources. Break down how you will use this money, such as for inventory, marketing, payroll, machinery, rental space, or other expenses. If you have a plan to scale your business over time, also include a timeline for when you'll need additional financing. For example, you may plan to open an additional store or facility in three years.
Your projected earnings over the next 12 months, as well as the first 5 years of your business. This will be based on factors such as:
- Startup expenses.
- Expected sales.
- Operating expenses.
- Cost of inventory, supplies, and equipment.
- Cash flow statements.
If you're planning to sell your business at some point, discuss your timeline and goals.
- Timeline — When do you expect to sell? This can be an approximate date, such as three to five years. It can also be a certain benchmark, as in annual sales.
- The price you expect to get.
- Selling Strategy — Type of buyers you will target and how you will reach them.
Need Help Creating Your Business Plan?
Creating a business plan can be challenging and time-consuming. If you need help, we provide complete business plan assistance. To learn more, book a free 20-minute call, during which we'll go over your needs and answer your questions. If you want to proceed further, we'll set up a workshop, so you can get started with your business plan.
Tim Hatari helps businesses improve performance, creating strategic development plans and establishing structure via the 5PX Executive Business Coaching System. As CEO and Founder at TMD Coaching, he oversees the vision setting process with clients, leading on sales acquisition, the drive for operational excellence and market leading innovation. For Tim, helping others is the most rewarding part of the role. Follow or connect with Tim on Linkedin - www.linkedin.com/in/timhatariView All Articles
Topics from this blog: Business Planning, Strategy