You don’t need to be a big entrepreneur, executive or a venture capitalist to consider drafting a business plan. Any kind of business you are about venturing into requires a well-documented plan – right after you are done collecting data on the business.
Now, while there are lots of things to consider adding to your plan, depending on the type of business and its scale, there are key elements every business plan must have. These key elements are what help you articulate your goal which basically determines whether you can accomplish your mission. Without these crucial parts of your business plan, the document will just be a bulleted list of your wishes and dreams.
But with them, your business plan will show promise, seriousness and helps both you and any other person reading clearly see the plot of your business’s growth trajectory. Here are those key elements and make sure they are included in the next business plan you are drafting.
Executive summary
The executive summary is the most important element of your business plan because it gives a quick view of the most important points articulated in the other sections. It summarizes all the important information about your business proposed in your plan into a short piece that allows the reader have a grasp of what the plan is. An executive summary is only as good as how much it has been able to cover the other sections. That is why one technique of writing the executive summary of a business plan is usually to do it last, so you can just fish out major ideas in the rest.
It might look unimportant seeing that it just repeats every other thing you have said but in fewer words. However, it can also be the most important part of your plan because it is what tells investors why your business is likely going to succeed and consequently why they should listen and invest. Therefore, it should start your mission statement, your company profile and goals. It should also include your products and services, your growth and target market.
Market analysis
Market analysis describes your industry and details the target market of your products and services. It gives information about the market behaviour and what makes it the best for what you have to offer. Part of what you are doing here is to give current trends in that market and what it means for your products and services.
But a very important aspect of this section is your competition. You will discuss them in details, provide revelant information about them like who they are, what size of the market they currently control, what your competitor’s weaknesses are and what their strengths are.
Also, you will include why your products, techniques, services are superior to theirs and how you intend working around their control of the market. In this section, you will also discuss the various barriers that will rise against your entry into your target market.
Business description
This section is important because lenders will want to understand what kind of business they are lending to: are you a corporation, sole proprietorship, partnership, and so on? They will also want to know how your company is organized and who is in charge. It doesn’t end there. They will also want to know the experience and qualification of the persons in charge.
In this section, you can also mention any market advantage you have and any business relationship you have that will help give you that market advantage. Other questions you can answer here include where you are located and your projected growth.
Marketing and sales
The marketing and sales section of your business plan will discuss a few things relating to the branding, advertisement and market distributions of your products. The first is your market penetration strategy, which includes how you intend to grow your business and drive sales once you have successfully overcome all the barriers standing against your entering the market.
Here, you should also discuss both the distribution channels you intend using (including why they are most suitable for both your products and your target market) and the communication channels you intend employing to stay connected with your customers.
In summary, this section should detail how you intend spending your marketing budget, the sales options available to you and expected ROI. For instance, if you hope to use digital marketing techniques, here is where you discuss its costs, along with the projected expenses on advertisement.
Funding requirements
Chances are you are using your business plan to source for funding for your business. For instance, if you intend to use business guardian angels to fund your business, they will want to be acquainted with your financial data, which will include your company balance sheets, cash flow, and income statements for the past 5 years. They will also want know, depending on your kind of business, what your professional indemnity insurance is like and how you plan covering any legal cost.
If you are depending on external funding for your business, then this section is pretty important. Therefore, you should do a best case and worst-case scenario here so your investors can know what to expect. This includes stipulating projected profit margins for your business.
Financial projections
This is another important section for securing funding because it gives the investor an idea of what success looks like. However, any projection you make here should be backed up by current information. The information should also be based on both your company growth so far and the future implications of market trends. You basically just have to use information of what are today’s realities to speak for the success of your business in the future.
Conclusion Though writing a business is tedious, it is important you take time and do a good one even when the intention isn’t really for sourcing funds. A well-crafted business plan with the right information to support its claims will ensure you identify and stay on top of every potential problem trailing your business especially at the start off stage.
