As a budding entrepreneur, it's important to have an effective business plan in place to ensure that you're on the right track and that you'll have enough money, time, and other resources to carry out your plan of action.
Even though a formal business plan isn't required for every successful start-up, many founders find it beneficial to sit back, investigate their idea and the market they want to enter and grasp the scope and strategy behind their methods. Here comes the role of drafting a business plan into play.
The following nine sections should be present in your business plan:
1. Opening Organizational & Legal Pages
The opening pages of your business plan help you organize the rest of the document and safeguard your business idea. The cover page is crucial. Non-disclosure agreements (NDA) aren't required unless you're concerned that your company's ideas will be stolen. The table of contents serves as a guide for the entire document.
The company and owner's contact information is included on the cover page. Include your name, address, phone number, and email address on the document's cover page. You may also want to include the "company name" if the company name registered with the state is different from the business name.
Documents like non-disclosure agreements and confidentiality agreements are used to keep secret company information safe. Having someone sign it before reviewing your business plan is a good idea if you're worried someone would exploit the material for their gain at your expense, like stealing your business idea or a specific marketing technique.
Table of Contents
The table of contents lists all the parts and subsections in your business plan. These headers (Executive Summary, Company Summary, Products and Services, and so on) are all part of a business plan. The sections can be numbered if you want to keep track of them. Executive summary 1.0, 1.1, and 1.2 are all examples of corporate objectives.
2. Executive Summary
A one- to two-page executive summary is an elevated business strategy overview. Investors may simply want to see the executive summary of your business plan. Make it a short, informative, and persuading representation of your company's overall business strategy. The executive summary should be written last in the business plan after completing all the other sections. Waiting until the end of your business plan to complete this section allows you to focus on the most crucial aspects of your plan.
The following information might be included in the executive summary's opening sentences:
- Business Description: This is comparable to a 30-second elevator pitch outlining your company's unique selling proposition.
- Products and services: Include a description of the products and services you offer customers, along with an estimate of their costs.
- Competitors: Give a precise summary of your big competitors and why your company will prevail despite them.
- Management and Organization: Outline how the owners' backgrounds will help the company prosper while mentioning them. Talk about the corporate structure of the business as well, if necessary.
- Business location (or facility): If the firm's location is crucial to its success, you might want to go through the site's advantages and the surrounding.
- Target market and ideal customer: Describe your ideal customers and why they will buy your goods or services.
- Financial data and projections: Give brief financial information and estimates that are pertinent to your firm, such as startup costs, the month that the company will become profitable, and anticipated sales figures.
- Financing needed: Finish the introduction by outlining the sources of startup money and the amount of funding that is being requested.
Specific and realistic objectives for your firm are the challenges you have in doing business. For example, "Attract at least 80 clients per day within the first year of business" or "Generate a positive cash flow from operations with at least 15% net profit to sales" You can also specify financial goals for your firm. Use bullet points to organize your business goals into at least four separate categories.
The mission statement explains your company's goals, objectives, and values. As a rule of thumb, it's a one-sentence to several-sentence remark. Your company's mission statement may change as it grows.
Keys to Success
The clear advantages your business will have are your keys to success. For instance, if your location is a significant advantage for your business, you should be more specific than just saying "location" and clarify what aspects of your site, such as visibility, parking spaces, a drive-thru, or closeness to housing, are essential to its success. Similar success factors to your company may exist among your rivals.
Competitive advantages are different from keys to success since, in most cases, a competitive advantage is something that your rivals cannot match. It is a distinct advantage or secret knowledge, like a patent. It is possible to include the competitive advantage as a success factor. Make two to three success factors into bullet points.
3. Company Summary
If you already have a business or are starting one, the summary portion of your business development plan should focus on what makes your company successful. Make sure to include information about the firm in the first paragraph or two, such as the name of the company's owners, its hours, and its products and services.
Startup Funding Table
Identifying the products acquired with the funds in your business plan is important if you're trying to raise money from investors or banks. If you're using the extra money to buy equipment, for example, note everything you're buying and how much it costs. The total of all costs should be shown at the bottom of the graph, and this is the amount of money asked.
Discuss the company's owners and their backgrounds briefly. Show why these owners are likely to be successful in operating this firm by sharing information about each owner's industry experience, former employment, education, and accolades obtained. It will be covered in further detail in the section on management and organization below.
Your company's competitive advantage should be based on what it can accomplish better than its rivals. It's the single most important factor in making your firm a success. Specific competitive advantages such as patents and proprietary technology, data, and industry ties are sought after by many investors. The number one thing your company will do better than its competition is to describe the quality of its products, services, relationships with vendors, or marketing plan if you don't have these.
4. Products & Services
This is the most adaptable area based on the items and services your company sells. No matter what you're offering, you must have a business model that explains how your company will earn money. Include any potential future products or services that the company plans to offer in the next year, two years, five years, or more.
How the company produces, money is referred to as its business model. This area is critical if you have a new type of business or an innovative method for producing a product or service.
Describe your physical products in this section. You'll learn about the company’s products and services in this section. It's a good idea to have both categories. Don't forget that services don't have to be sold at a cost.
You need to explain how your items or services will be delivered, whether you're marketing them as a product or a service. Determine how a service like installing windows will be carried out. How will the window be installed, and where will the glass be purchased? How will your products be assembled, packed, and shipped if you're a retailer?
5. Market & Industry Analysis
Market and industry analysis is when you look at your potential customers and industry. In this area, you should provide data to support your claim that your company would succeed. You'll want to learn about the struggles and triumphs of your competitors. Remember that the purpose of this part is to persuade and make a case for your business's success.
Your company's target market is also known as market segmentation. These people will most likely use your products or hire your services shortly. Do this by looking at their demographics and determining what they like to do and where they live. As a business-to-business (B2B) seller, use qualities to characterize the ideal customers you'll be targeting.
Target Market Segment Strategy
After you've defined at least three segments, describe the approach you plan to use to attain them. A marketing approach is likely, but it might also be price, networking, or sales. It's also important to give an overview of your potential customers' thoughts about your product or service.
The business industry should also be examined, as should the reasons for starting a company within that field. It is more likely that banks will offer your business capital if your industry is expected to grow and attract more clients.
Analyze at least five competitors within a five-mile radius to wrap up your market and industry research section (expand the radius, if needed). Organize the five competitors into a table and include their distance from your firm (if applicable), obstacles, and triumphs. While conducting an in-depth analysis, you'll want to think of their obstacles as opportunities for growth.
6. Marketing Strategy & Implementation Summary
Marketing strategy and implementation are where you lay out your plans for how you'll go about executing that strategy. Provide an outline of the following sections in the first few paragraphs. This part could be longer for certain firms than others.
E-commerce businesses may establish their website, social media strategy, and an online advertising and email marketing plan. Shorter segment for government contract-based companies that don't do a lot of marketing.
Discuss the company's entire marketing plan. Video and Facebook ads are examples of current market developments that you can utilize in your business development plan. The advertising plan and budget should be included, if necessary, along with the channels they will use. Mention the person in the company who will be in charge of marketing.
Online Marketing Plan
Tools including the company's website, social media, email marketing, and video could be used in an online marketing plan (also known as a web plan). If you're engaging a business to conduct any online work, such as constructing a website or maintaining social media, give a brief description of them and the total cost (you can elaborate more on costs in the financial data section).
Your sales plan should be discussed if it is a significant part of your business. Mention who will play what role in closing the contract with clients, how they plan to lead the follow-up procedures, and where they plan to network. In addition, talk about any training your salespeople will be required to participate in.
Discuss product (or service) price, rival pricing, sales promotions, and discounts under the section on a pricing strategy—basically anything to do with the cost of your products or services. Speaking of the quality of goods and services, you should also talk about pricing. It could be a good idea to include a summary of prices for particular products, such as pizza price breaks for catering orders of a certain quantity.
7. Management & Organization Summary
There is a lot of detail in the management and organization summary on the company's history and staffing plan. Investing in people rather than corporations is a common claim by many investors. Make the case that you and your team have the experience and knowledge necessary to make this firm successful in this portion of your application.
8. Financial Data & Analysis
The financial data and analysis section in a company strategy is the most challenging part. This part asks you to protect your company's income and expenses for the following three years. A working grasp of common financial statements, such as the profit and loss statement, balance sheet, and cash flow statement, is required.
Declare how long it will take you to pay back the loan and from where you plan to acquire the money. Financial forecasting can tell bankers whether or not they'll get their money back and how likely that will be.
Appendixes are for business information that doesn't fit into the previous categories but needs to be included in the document. To some extent, the information you include here is determined by the type of company that you intend to start. An appendix is a nice place for any visual elements. Add a menu and artist rendering of the restaurant's inside and outside, for example.
An appendix to a business plan is not essential; however, it is strongly suggested to bolster the argument. It's common for documents such as media coverage, agreements, and equipment documentation to demonstrate to investors and bankers that you're serious about the venture. The second table of contents placed before the appendix might be necessary if your appendix grows to be more than ten pages long.
Business planning gives you a solid foundation for growth
Even if you never plan to pitch to investors, a business plan can help you establish clear, intentional next steps for your organization, and it can help you spot gaps in your strategy before they become problems.
Your business plan, whether for a brick-and-mortar store or a web-based venture, is now armed with everything you need to get started on the next chapter of your company's lifecycle.
Markaz—is committed to helping you take the reigns of your own business. Learn more about the benefits of how you can partner with us as a seller, here.