If you’re here, you probably already know that yes, you do need a business plan. Not only is it important for you to visualize everything you need to sort out for a successful start, but it can also help you figure out your strategy, determine the steps you need to take to achieve your vision, attract investors, get grants and funding.
Even though there’s no exact template to follow, you can use the basic parts that are vital to any business plan, especially for start-ups and small businesses who are getting started. Overall you need to remember to always remain detailed and comprehensive, while also opening new ways of communication and where you want to head creatively to make sure you succeed and attract the right audiences and funders. A business plan provides investors, lenders and potential partners with an understanding of who you are as a company in terms of structure and goals.
This article will dive into the key components of an effective business plan to ensure you develop a successful first step for your company.
Why do you need a business plan?
Before we start with what to include in your business plan, we need to understand why business plans are important. In order for you to begin with your venture, you have to have a clear outline of action, without it, you can’t know where to bring to reach your goals.
These plans can give you clarity about how viable your company is and you need to grow and prosper. Also, a business plan helps establish which specific steps you must take to start and grow your business.
Below are a few things to remember about business plans:
They show a clear way to track progress as your company grows.
They visualize what resources are needed to reach goals.
They help you create a clear timeline of what you can expect to achieve specific goals.
They enable you to predict and plan for potential risks.
They aid investors to see the viability of your company.
What are the 10 critical elements of a business plan?
Effective business plans must contain several key elements that determine the steps you need to take to achieve your small business goals, so make sure that your business plan includes the components we will describe in the following sections:
1. Executive summary
This is a short but very compelling overview of your business to start the document. You’ll probably want to write this section last, so you can include the best points from the rest of your plan.
The executive summary is probably the most critical part of a business plan. With it, you provide an overview of the business plan as a whole and what it will cover. Your executive summary should include the company’s mission statement, products and services you plan to offer and the reason behind your company’s birth - make them love your idea as much as you do!
2. Company description
The next thing that interests whoever reads this document, is a proper introduction of your company. It should have complete information about what your company provides or will be providing, products and services, your target audience, your goals, paying specific attention to how you are different to everything else in the market. This description will also help the readers how your business differs from competitors and who you are catering for.
3. Market analysis
In this section, you should detail the financial prospects of your industry as well as its growth potential, the overall market, and your competitors. In hand with the company description, you should further explain with data how to fill an unanswered need in an industry that is growing.
By doing so, you show that you have a key understanding of the industry and the market you’re entering. Make sure to include data and statistics that break down industry trends and themes. Additionally, you can help visualize here who is your audience as personas - what they like, their buying habits, and services they want and need, among other target preferences.
Related: Ways to kickstart your small business.
4. Competitive Analysis
Next up, you should give the readers a clear picture of your competition and how you are planning to enter the race against them. You should include a clear comparison of your business vs your direct and indirect competitors, alongside their strengths and weaknesses. This will close the whole section of the market you’re targeting, the reasons for your business, and how it all plays together with the current overview.
5. Description of management and organization
Once you’ve set the scene for the market, and where you’ll enter, you need to explain who you are further. In this section, you have to include your background and experience, as well as any other leadership within your business. Mainly, you should focus on the skills and achievements you all have that will aid your company’s success.
This section of your business plan must also outline how your organization is set up. For this, you can create a diagram that maps out your chain of command. And finally, you must indicate whether your business will operate as a partnership, a sole proprietorship or a business with a different ownership structure.
Related: Types of business ownerships and how to choose.
6. Products and services breakdown
This part centers around the business’s target itself. Give an overview of what products and services you are providing, the life of your products, and what you need to make them (such as suppliers, cost of production, financial backing you hope to secure, copyrights and patents). Be as detailed as you can, since this is the part to deep-dive in everything you actually work for and hope to achieve as a business!
7. Marketing strategy
For the marketing strategy, you should describe how you intend to get your products and services in front of your target customers you already spoke about before. Break down here all the steps that you will take to promote your products and the budget that you will need to implement your strategies. Read more on the steps to create a marketing strategy and budget!
Related: Best digital marketing strategies for startups.
8. Sales strategy
Alongside your marketing strategy, you should add the sales strategy, answering how you will sell the products or carry out the services that you intend to offer. For this, make sure to break down how many sales reps you will need to hire, sales targets you intend to meet, and of course, how you will sell the product. Add numbers, places, and strategies, since this is the most important part for many readers.
9. Financial projection and needs
This section will reveal your financial goals and your potential based on the market research you completed before. You should add a report of your anticipated revenue for the coming year, also the annual anticipated earnings for the next five years.
Also, you must detail how you anticipate bringing this revenue and if there is any funding you'll need to get started, as well as your financial statements, to always remain transparent.
The final section of your business plan is open to any extra information to further support the details outlined in your plan. For example, you can include any research and studies done on the viability of your business plan that backs it up. A few things you can add here are permits, resumes, financial documents, pictures of your products or services, marketing materials, marketing research, and any legal documentation that might be relevant.
Make it your own
Remember to tailor your plan to your business needs. For instance, this will be different if your business is self-funding or you obtain funding from non-traditional sources. If you want to attract investors or apply for a bank loan, you need to focus on financials and making the case for the profit potential and trustworthiness of your business.
If you are looking for funding as the next step in your business plan, we can help! Forget complex application processes and strict requirements with One Park Financial! We work to help owners of small and mid-sized businesses access the working capital that they need. Our process is simple and straightforward, and we’ve helped many small businesses who have been turned down by banks to access funding. Apply now!
Disclaimer: The content of this post has been prepared for informational purposes only. It is not intended to provide and should not be relied on for tax, legal, or accounting advice. Consult with your tax, legal, and accounting advisor before engaging in any transaction.