We previously talked about what a business plan is, so now let’s talk about the crucial elements that your business plan should have. Click on the above link for the previous article. But to briefly explain, a business plan is the road-map of operating a business.It helps you monitor all your business activities, milestone, and goals. It also helps you stay focused and know what works and what needs to change.
You probably have a business idea that you would like to bring to reality, but you just aren’t sure of the steps to take to write your plans without missing any important aspects. To be frankly honest, there isn’t a right or wrong way of writing a business plan as long as you can fully understand what you have written. That being said, I must point out that it is also important to include the main popular elements that people usually look for when trying to read and understand the detailed information of a company. You want it to be as professional and easy to follow as possible. Even if it was initially only meant for you to read, you just never know if you may have to share with colleagues or financial lenders in the future. So, let’s get right into it and outline those elements.
Every business plan should have an executive summary starting on the first page of the business plan. The executive summary should basically highlight the important aspects of the business. Even though it appears on the first page of your business plan, it should be written last. Make sure that your company’s name, address, product/services, and purpose of the plan are included in the first paragraph of your executive summary. The rest may highlight everything else such as what your business is about, its goals, plans, the company’s background, the capital requirements, management, mission, keys to success, competitive advantages, and the financial projections for maybe the next 3 to 5 years. Make sure to be clear and concise. It should cover about a page or two. I must clarify that executive summaries could slightly differ depending on the business type. To simply put, just write about what a brief summary of your business will be about.
The company description of your plan should give detailed descriptions of your business such as its size, growth rate, when and why it was opened, the business model, your business strategy, how to address legal affairs, security matters, and information about the products/services that you plan on selling. It is also important to include the company’s operation plan (location, equipment, capital, production process, supplies and sources, and everything else related to the operation of the business), the company’s background (optional if it is an internal plan), and legal forms of the business. You may include the details of your products/services here or create a separate section.
Marketing Plan & Analysis
Make sure to describe what your target market is. You may include a market growth, trend, and even forecast to help you have a better idea of where you are, where you are going, and what you should do to get where you are going. This part is often set up in a form of a table.
Also, talk about who your clients are, what they need, your unique selling points, a promotional/distributional plan, where to find your clients, and how to reach out to them. Note down all your research as you go.
The competitive analysis basically outlines who your competitors are, what makes you stand out among your them (competitor advantage), and what makes your product special. Knowing your competition is very important because it may give you a better idea of what to focus on and even what your potential clients may be looking for.
Strategies & Implementation
You must be as specific as possible when writing in this section of your plan. Talk about your short-term/long-term goals and specific ways to get to each one of them. Outline everything in ways that you could easily cross out what you have accomplished as you go. Talk about your milestones (dates, deadlines, sales forecast, and budget). Once again, be as specific as possible. This is one of the most important parts of your business plan.
Financial Plan & Analysis
The financial plan and analysis should talk about anything related to the financial structure of your business such as the profit/loss, cash flow, balance sheet, and income statement. At the very least, make sure that you include your projected profit and loss, as well as your cash flow (where is the money coming from and what is it financing) of your business.
If you plan on getting grants, investment offerings or loans, make sure that you include detailed information about your loan requirements, your intended use of the funds, and/or the collateral, and most definitely repayment plans.
Describe your management team by giving details about who will manage your business. If you have more than one member, talk about each person’s position in the team and his/her experiences. If it is part of your plan, you may also want to describe how you would grow your staff membership for future business objectives, key personnel, training, rewards, employment strategy, and related costs.
The purpose of a business plan isn’t just limited to what you plan on doing before starting your business; it should also include necessary steps to take as you grow, the changes that you make, and what to do to improve the overall structure for the betterment of your business.
Depending on what you intend to do with your business plan, you can make it as simple or complex as you want. Whatever you choose to do, just make sure you are as detailed as possible. Don’t write your business plan in codes. You may think you understand now, but you may confuse yourself later down the line. If you have any questions, be sure to comment below. I wish you all the best!