There’s more value in creating a business plan than just doing it because you’re supposed to – because the bank or a prospective investor is demanding it. See your business plan as your roadmap to success.
Your business plan can determine how feasible your business idea is. You’ll have a clearer idea of where you are going and whether that path is leading to success. You’ll be able to see any gaps that you have – money, skills, or other resources – and you’ll find out if you need to hire someone with a specific skill set that your current management team doesn’t have or whether you need to do more market research.
Your business plan will also help you to determine how much money you need to get your business off the ground and growing, and whether you need to seek additional funding.
If you don’t have a business plan yet, it’s time to create one; don’t wait until your bank asks for it.
Let’s look at the most important things to include in your business plan.
How to Put Together a Winning Business Plan
1. Executive Summary
In your executive summary, you should clarify the objectives of your business and why you believe it will be successful. Give an overview of what you want to achieve, the financing you require, the skills and experience of the management team, and the outcomes you expect.
If you’re creating a business plan in order to secure funding, your summary is the most critical part, and you should spend the most time on this. Give the reader a quick overview of what they can expect and why they should read on. Depending on how enticing this summary is, they’ll decide whether they’ll read the rest of the business plan or not.
2. General Company Description
Include the name of your business, the type of entity, an overview of your industry, a brief history of your business and where you see yourself in the market, your mission statement, and what gives you an edge.
3. Opportunity, Risk, Industry, and Market
In this section, you should describe the opportunity, how you identified the gap in the market, and how you plan to solve it.
Outline who your competitors are, the suppliers that you’re going to use, who your ideal customers are, and what the risks or barriers to entry are related to these stakeholders and how you’re going to address it.
Also give specifics on the size of the market, the trends that you see, whether the market is growing and how, and what you anticipate your market share to be.
Finally, shed some light on changes that are affecting the industry, like technological change, the economy, and related laws and regulations.
4. Business Strategy
Here you should talk about your overall strategy and how you plan to succeed. How is your offer different from your competitors? What is your unique selling proposition? You can go into more detail about who your target market is, the market trends and shifts you see, like consumer preferences, demographic shifts, and product developments, and bring it all back to how you’re going to target them.
5. Business Model
Your business model is all about how you’re going to make money. For instance, are you going to manufacture your own products or are you going to purchase merchandise and sell them for a profit? Are you going to sell your products or services online, or will you open a brick-and-mortar shop? Are you going to sell to other businesses (B2B) or directly to the public (B2C)?
Get into a bit more detail about the costs, the profit you’re expecting, the investment you’ll require, as well as assumptions and factors that will affect profitability.
6. Management Team
Your management team is important because investors know that without the right team, your business will struggle to be successful. List your founders and include their qualifications, experience, and what their strengths are.
Also, include who will manage the day-to-day operations and list their key functions and responsibilities. What makes them qualified to fill that role and what do they bring to the team?
7. Marketing Plan
In your marketing plan, discuss the sales and distribution channels that you’re going to use. Detail the marketing, advertising, PR, promotions, and events you want to invest in. Explain your pricing strategy and your positioning – are you going to compete on quality, price, service, or uniqueness?
Explain how you’re going to convince customers to buy or sign up for your service. What are the benefits, who is your target market, and what gives your product or service an edge that will make it easy for people to say yes?
8. Operational Plan
Your operational plan should list the day-to-day activities and processes of the business. Where will you be located, how many and what type of employees do you need, and which assets will you need? These should include people and processes for all departments, such as manufacturing, logistics, customer service, admin, and sales.
If you operate in a seasonal market, also state this here and how that will affect operations.
9. Financial Plan
Your financial plan is all about the figures. Include the following calculations and projections:
- The estimated sales – quantities and revenue
- The costs to set up your business
- A 3-year profit/loss projection
- A 3-year cash flow forecast
- The amount of financing needed to get your business off the ground, as well as how you plan to repay investments
10. Supporting Documents
Finally, you want to include supporting documents for all assumptions and estimates you’ve made in the business plan. You don’t want to get into too much detail inside the other sections, so this last part is where you can include more information so that readers of the business plan can refer to it if they have any questions.
Include the following, where relevant:
- Articles, industry studies, and market research reports
- List of equipment owned and needed
- Price lists or quotes for equipment and services needed
- Copies of contracts
- Detailed calculations and assumptions
Ready to Write Your Business Plan?
As you can see, a business plan is not something that you put together in a couple of hours. But, you should also not overdo it. A potential investor or financier may not have time to read through a 100-page document. Rather include just the most important details and spend some time on perfecting the executive summary to entice them to read further and to set up a meeting with you. They will always have more questions. Instead of trying to provide every little detail in the business plan, give them just enough to peak their interest and then you can answer their questions in more detail during your meeting.
Once your business plan is finished and approved, your work isn’t done yet. You have to keep it updated and revise and develop as things changes and your business grows.
If you need any help creating your business plan or calculating your cash flow forecast and profit/loss projections, or if you need a second pair of eyes looking it over to make sure you’ve crossed all the t’s and dotted all the i’s, get in touch with us. Our passion is in helping small businesses to be successful, and we know how valuable a business plan can be in reaching your business goals.