A well- created business plan is the cornerstone of business success. Every entrepreneur and startup company needs a plan. From the traditional document, business plans have already changed its attire. It’s not a mere document its life that you outlined to achieve your desired goals. A business plan is a road that provides guidelines so a business can plan its future and helps it avoid bumps in the road. The business plan should be accurate and thorough and keeping it up-to-date according to the changing market situation. It’s a written plan from a marketing, financial and operational viewpoint. However, traditional business plans can be a confusing one that consumes time, money and effort at a vital moment. Don’t plan your business unless you know why and what you are trying to achieve with it. But without having a systematic structure, you can’t keep going.
Whether it is modern or traditional, a business plan is a well-crafted document, though you can spin away from it when the new insights are come up. Fortunately, creating a business plan has become much simpler today. There are plenty of data sources to support assumptions and to complete research. And also great freelancers available online who can help handle time-intensive parts of the process like research and formatting, and interactive Pro-forma.
Each section of the business plan should include specific elements and address relevant questions that the people who read your plan will most likely ask. In this article, I would like to share general components of a business plan, covering these key pages in your business plan for your startup business:
Title page and contents
Every presentation templates should have a systematic order. So, the same thing should be applied for your business plan documentation. Because your readers want a plan that looks professional, is easy to understand and is well-put-together. If you are presenting your plan before a bank manager, he/she can easily go through your summaries without consuming more time. A business plan should be displayed in a binder with a cover listing the name of the business, the name(s) of the proprietor(s), address, phone number, e-mail and website addresses, and the date. Don’t spend more money to decorate your document.
The title page is also be crafted with the same information. You can add your logo additionally. A list of contents monitors the executive summary or declaration of purpose so that readers can easily find the information or financial data they need.
The executive summary outlines the company and includes the mission statement along with any information about the company’s vision, leadership, operations, employees, and location. It also tells what you want and why of a particular business. The summary should be no more than half a page in length and touch the key points such as:
• The business concept defines the business, its product, the market it serves and the business’ competitive advantage.
• Financial conditions include financial highlights, such as sales and profits.
• Financial requirements, mention how much capital is needed for startup or expansion, how it will be used and what collateral is available.
• Current business position and historical developments, legal form of operation, the principal owners and key personnel.
• Major milestones, such as patents, prototypes, important business deals regarding product development, or results from test marketing that have been conducted.
Company description focused on the nature of business with a short explanation of the industry. When explaining the industry, discuss what’s going on now as well as the viewpoint for the future. Do the obligatory research so you can deliver information on all the various markets within the industry, comprising references to new products or development that could benefit or obstruct your business. All the data should be based on reliable observation and be sure to indicate your sources of information when necessary. Remember, investors, and bankers want to now hard facts, they don’t like to spend money on mere assumptions or speculation.
When explaining your business model try to mention, in which sector it falls into (manufacturing, service, wholesale, retail and so on), and whether the business is new or established. Then say whether the business is a sole proprietorship, partnership, or LLP, corporation etc. next, list the core values and state what they bring to the business. And mention, who are the business customers, how big the market is, and through which channel the product/service is distributed and marketed. A business description delivers a summary of key aspects of your business, like what you do and what marks your business original.
Products and services
Next, to the company description, describe the features of product or services. The company description can be a few paragraphs or a few pages in length, depending on the density of your plan. If your plan is simple, keeps your description in short, describing the industry in one paragraph, the product in another and the business and its success indicators in two or three more paragraphs. When you describe your product/service, make sure your reader has a clear idea of what you are talking about. Explain how individuals use your product/service and chat about what makes your product/service different from others available in the market. In today’s business world, most of the business models are difficult to understand, especially IT-related businesses. Your investors want to know the entire features of your business, so it is your duty to convince them comprehensively. Be exact about what sets your business apart from those of your opponents.
Then describe how your business will gain a competitive edge and why your business will be lucrative. Illuminate the reasons you think will make it successful. If your business plan will be used as a financing proposal, describe why the extra equity or debt will make your business more profitable.
Other information to address here is a report of the experience of the other key people in the business. Whoever goes through your business plan will want to know what consultants or experts you have spoken to about your business and their reply to your idea. They may even ask you to explain your choice of location or reasons for selling this particular product/service.
Frame your business plans only after the thorough market analysis. It will help you define your prospects as well as help you establish strategies, pricing, distribution and promotional tactics. Create your market analysis by outlining the market in terms of scope, demographics, structure, growth prospects, trends, and sales potential. Next, define how often your product/service will be purchased by your target market. Then figure out the potential annual purchase.
When measuring the scope of the market, your method will be governed by the type of business you are selling to investors. Your market share will be a yardstick that states you how well you’re doing in light of your market planning forecasts. In this business plan, you’ll also have to explain your positioning strategy. How you differentiate your product/service from that your nearest competitors and then determine which market slot to fill is called “positioning”. It is the consumer’s perception of a brand or product in relation to competing products.
Important: Your market positioning statement should be clear and concise. Doesn’t use elaborate descriptions, just point out who your target market, what they’re really buying, how you’ll reach them, and what is your unique selling proposition.
The criteria’s of your pricing is perhaps the most vital marketing decision. Though, product pricing is one of the most difficult, especially for small business owners. There are numerous methods of pricing products in the market. You can choose the appropriate one according to your market segmentation and nature of the product. There are cost-oriented method and market-oriented method. Some are listed below:
• Cost-plus pricing
• Demand pricing
• Competitive pricing
• Markup pricing
• Perceived value pricing
• Discount pricing
In marketing analysis, you must clear which distribution channel you prefer. How would you move your product from the factory to the end-user? Be sure to analyze competitor’s distribution channels before determining whether to use the identical type of channel or an alternative that may provide you with a strategic advantage.
You must include your promotion strategy in the business plan document. It should address advertising, public relations, packaging, sales promotions and personal sales. Besides, reports of SWOT analysis and PESTLE analysis may be an added advantage if you have done it earlier.
Competitive analysis is significant for investors that they are looking to invest in your company. Competitive analysis can be used to determine:
• The competitor’s strength and weakness
• Strategies that will offer you a different advantage
• Barriers that can be developed to prevent penetration to your market.
• Any weaknesses that can be utilized in the product development cycle
• Understanding competitor strategy
The first objective of a competitive analysis is to identify both direct and indirect competition for your business, and it’s present and future impacts. Once you have clustered your competitors according to the intensity, start analyzing their marketing strategies and identifying their vulnerable areas by examining their strengths and weakness. This will support you determine your distinct competitive advantage. By providing these materials, your readers should be very clear how well you have studied your market competitors and how you will stand apart from your competitors.
Operations and management
In this section, you can describe how the business functions on a continuing basis. It reveals the administration of business processes to create the maximum level of competence possible within an organization. It is concerned with the responsibilities of team management, logistics of the organization, task allocations, and capital and expense requirements related to the operations of the business. It also involves utilizing resources from staff, equipment, materials, and technology. Besides, the size of manufacturing plants and project management methods and the structure of information technology networks can be included.
Further, you can state the use of raw material and ensuring minimal waste occurs and the management of inventory through the supply chain.
Next, to the operations and management, you can add a comprehensive report of your financial plan. It may be created independently or with the help of a certified financial planner. Turn your attention to three major areas that may be the backbone of your business plan. These areas are; income statement, cash flow statement, and balance sheet.
The income statement is one of the three significant financial statements used for reporting the company’s monetary performance over a specific accounting period. It is primarily focused on the company’s revenues and expenses during a particular period. It is the cash-generating ability of a firm. The income statement contains four key elements- revenue, expenses, gains and losses. By integrating these items, the income statement demonstrates just how much your company gain or loses during the year by deducting the cost of goods and expenses from income to reach at a net result, which is either a profit or loss. The analysis should be very brief, focusing on the key points of the income statement.
The cash flow statement provides aggregate data regarding all cash inflows an organization receives from its ongoing operations and external investment sources. And also contains cash outflows that pay for business operations and investments during a given period. This has given a picture of how much cash you’ll need to meet requirements, when you’ll require it and where it will come from. It will show the cash made by the business in three main ways-through operations, investment, and financing. The integrated form of these three segments is called the net cash flow. As with the income statement, you’ll need to examine the cash flow statement in a short summary in the business plan.
Balance sheets are used to measure the net value of a business by assessing assets against liabilities. If your business plan is for a current business, the balance sheet from your last accounting period should be included. If it for a new business, try to project your assets and liabilities to determine what equity you may accumulate in the business. To avail of financial aids for a new project, you should include a personal financial statement or balance sheet.
In this last section, include any other supporting credentials that are of interest to your reader, such as your profile, dealings with suppliers, customers, letters of intent, letters of reference, copy of your lease and any other legal documents, tax returns for the previous years, and anything else important to your business plan.
A business plan is more than a document for financing, it’s a manuscript to help you define and meet your business objectives.