Starting a business? If so, you need a business plan. Business plans can help you brainstorm how your business will be received in the marketplace, as well as secure funding from outside sources. Business plans force you to look at your business in a macro sense—even if it is up and running—and sort out where you may have deviated or adhered to your original concepts, focusing on the right things, and giving you a road map towards greater and greater success.
There are seven essential elements to include in your business plan. In this article, we will take a look at each element and discuss how they relate to the success of your business in the future.
1. Executive Summary
Your executive summary is the elevator pitch for your business, where you can efficiently distill what makes your business a success—and why investors should take note of it as part of their future portfolio. A well-crafted executive summary should give readers a precise definition of why your business fulfills a market demand, including a synopsis of subsequent sections of your business plan (see below). One of the best ways to approach writing the executive summary is to write a rough draft, and then finish it last. Comparing how you first envisioned your business may be different when you finally put all the pieces (see below) of your business plan together.
2. Business Description
Your business description is precisely that: a chance to describe your company and what it does. This should include how the company was formed and by which members, as well as a mission statement. Think of it as a part-biography, part projection. Tell your story and allow others to connect to your mission.
Some questions you should answer in the business description section of your business plan include:
- What is your business model?
- What separates you from the competition?
- Do you have special business relationships that offer you an advantage?
- Where is the business located?
- What is your track record of the previous business venture?
- What is the legal structure?
- What are some of the market opportunities?
- What is your projected growth?
Not only does this provide answers to questions that investors may have, but it also narrows your focus and solidifies where you have been, how far you want to go, and how you plan to get there.
3. Market Analysis
No matter what type of business you have, you’ve got competitors. In the market analysis part of your business plan, you need to present hard numbers and other empirical evidence to show where your business stands among similar businesses and the people you intend to sell to. This includes demographics, like who would make up your ideal customer, your core target market, and other market research that pertains to your business. Testimonials from customers and high-value businesses can help draw persuasive conclusions to the dry numbers. For instance, if your business offers to deliver fair-trade coffee to corporate locations, it cannot hurt having a quote from an executive saying how your business is better than the rest for x, y, and z reasons.
4. Organization and Management
The organization and management section of your business plan is the place for you to showcase your business’ personnel. The idea is that your business is only as successful as the talented individuals that are involved with it. Think of this section as a resume for your business, as venture capitalists want to know whether you have a competent team or staffing problems. You will want to highlight the expertise and qualifications of each member of the team in your business plan and show how they fit together with one another like puzzle pieces. Make sure to highlight how your staff is part of the business’ mission. For instance, if you have a catering business, you should mention that your CIO studied culinary arts as well as being proficient in building websites.
5. Sales Strategies
Now that we are in the sale strategies section, you need to explain how your business plans to turn a profit. You should describe how you plan to price your products and services, why this number is what it is, and how you plan to make customers/clients aware. Marketing and advertising should be covered, including how you plan to grow your customer base. This should include inbound strategies like social media and a website, as well as outbound strategies like mailers, email campaigns, etc. Additionally, you should present a time of press releases, media mentions, and other appearances to help raise your brand awareness. Last, come up with a list of promotions that have worked in the past or that are projected to work. For instance, if you have a holiday promotion, show how an investment now can lead to a big return in a short window of time.
6. Funding Requirements
At this point in your business plan, it is time to get down to business: ask for the amount of money you need. You will want to be as realistic as possible, while at the same time shooting for a higher number to account for investors who may want to “negotiate” a rate that mitigates their risk. Consider creating a range of numbers if you do not want to try to pinpoint an exact number.
Also, include a timeline of goals that can be achieved and what investors can expect from their investment. You will want to include information in a best-case scenario if your business is fully funded, as well as a worst-case scenario if the venture should fail. For instance, you may want to mention that a $10,000 investment into your company is responsible for acquiring the proper licenses in order to do business; otherwise the business may be held up until 3 months later when the funds become available from small business loans.
7. Financial Projections
The last section of your business plan should include financial projections, or how much the business intends to make by certain dates. You will want to emphasize any successes up the business has had up to this point, and show that with proper investment, the business can break into the next tier(s) of development. This is especially important if you hope to secure funds for expansion of your existing business.
Your financial projections should be based on information about your revenue growth and market trends, which you may wish to reiterate from the “Market Analysis” section. Essentially, you want to show investors a logical sequence of events that indicate when they can expect to see returns.
Did you find the information in this article helpful? Share your thoughts about planning and implementing for a successful business in the future in the section below.