what are the key aspects of a business plan

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12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

• The name and location of your company
• Products and services offered by your company
• Mission and vision statements
• Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

• Business location
• The legal structure of your business
• Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

• The geographical location of your target market
• Needs of your target market and how your products and services can meet those needs
• Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

• Industry description and statistics
• Demographics and profile of target customers
• Marketing data for your products and services
• Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

• Your competitors' identified advantages in the market
• How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
• The standout qualities that distinguish you from other companies
• Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

• Information about how your company plans to carry out its operations.
• The base location from which your company intends to operate.
• The number of employees to be utilized and other information about your company's operations.
• Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

• Projected income statements
• Cash flow statements
• Balance sheets
• Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

• Legal documents
• Licenses and permits
• Credit histories
• Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

• The management team and other stakeholders resume
• Marketing research
• Permits and relevant legal documents
• Financial documents

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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How to Write a Business Plan

Last Updated: February 16, 2024, 12:05 pm by  TRUiC Team

Writing a business plan can be an intimidating endeavor. Whether you’ve decided to start a business , or you already have a business and need to write a business plan to apply for a loan or to pitch to investors , we cover the process in-depth.

Recommended: Our business plan generator walks you through topics like marketing and financial projections so that your business is prepared to succeed.

What Is a Business Plan?

The traditional business plan is typically a 20 to 40-page formal document that describes what your business does, what your objectives are, and how you plan to achieve them.

It lays out your plans for operating, marketing, and managing your business, along with your goals and financial projections.

There are many different types of business plans, depending on the stage of your venture and the purpose of your business plan. In the earliest stages of your business idea, you may want to start small with a three-sentence business plan , or perhaps by sketching out a lean canvas or business model canvas .

Once your business idea has been developed, you’ll be ready to begin writing your business plan .

Why Do You Need a Business Plan?

Writing a business plan requires you to think through all of the key elements of your business. This gives you insights into the challenges you’ll face and the strengths you bring.

A business plan is also often requested by lenders or investors when you are ready to seek financing.

While many companies do not need a formal business plan unless they are planning on seeking investors or applying for a business loan , writing a business plan has extensive benefits.

The process of writing your business plan allows you to take an in-depth look at your industry , market , and competitive position . It helps you set goals , determine your keys to success , and plan your strategies . It also allows you to explore your financial projections and manage cash. So, even if you do not need a formal business plan, the process of planning may still reap huge rewards.

Your Audience

You need to think carefully about who is going to read your business plan.

Although you might begin writing a business plan only to convince yourself, there are a number of stakeholders who may end up reading your business plan.

Your plan might be read by your:

• Partners or potential partners
• Board of directors
• Senior management team
• Current employees
• Employment candidates

Outside the organization , the following stakeholders may want to read your business plan before they decide to do business with you:

• Distributors
• And independent contractors

Think about your primary audience when you are writing your business plan. What are the aspects that are most important to them? This is where you will want to put the majority of your focus.

For example, lenders will be most interested in your financial projections — your cash flow statement and balance sheet.

Investors might be most interested in your business model, the uniqueness of your product or service, and your competitive advantage.

Partners, your senior management team, and current employees might be most interested in your strategic plans- your vision, your operational plan, and your organizational plan.

Find Sample Business Plans in Your Industry

One great resource you should check out before sitting down to write your business plan are sample business plans in your industry.

Not only will you have the opportunity to gain insights on your industry and your competitors, you also might be able to find troves of industry and market research that will make conducting your own analysis of the industry and market much easier.

To find example business plans in your industry, try searching the web for “ your industry business plan example.”

Writing Your Business Plan

Once you have spent some time looking at sample business plans in your industry, it is now time to start writing your business plan . An easy place to begin is by outlining the major sections you will need in your plan.

What you need to include in your business plan will depend on the type of business you are creating, your business model, and who your intended audience is.

Common business plan sections include:

• Executive Summary — a high-level overview of your business or business idea
• Venture Overview — a description of your company, vision, mission, and goals
• Product or Service Description — a detailed description of your product or service
• Industry and Market Analysis — an analysis of the industry and market you compete in
• Marketing Plan — your overall strategy and specific plans to capture market share
• Organizational Plan — the legal form of the business and the key players
• Operational Plan — how you will operate the business and your key resources
• Goals, Milestones, and Risks — short and long-term goals, milestones, and risks
• Financial Statements — Financial statements or the projected financials of your business

Not every type of venture will require every one of these sections to be included in their business plans. However, most business plans will at least include an executive summary, venture overview, a description of the products and services, and some form of financial projections.

Executive Summary

As suggested in its name, an executive summary is a summary of the key points in your business plan . This is your first chance to convey to readers the what, why, who, and how of your business or business idea.

Although there is no set structure for an executive summary, a good executive summary should summarize :

• The problem you are solving
• Your solution
• Your target market
• Any competitive advantages
• The team you’ll build
• Goals and objectives
• An overview of your financials or financial forecast

If you are writing your business plan for the purpose of acquiring funding , you will also need to discuss the amount of funding required, the purpose of the funds, as well as how your investors will get paid back.

The executive summary should be clear and concise . Ideally, this section should be one to two pages and typically follows either a synopsis or story approach, depending on the intended audience.

In the synopsis approach, you would provide a brief summary of each of the key sections of your business plan. In the story approach, your executive summary reads like a narrative, allowing you to tell the “story” of your business or idea.

With either approach to writing the executive summary, the information you want to convey remains the same. The executive summary needs to provide an overall picture of your current business or business idea.

The executive summary should include:

• A brief description of you and your venture,
• The problem your product or service is solving,
• Some information on your target market, including size, potential, & competition, and
• The solution you are offering.

The executive summary should also include:

• A statement of where you are now,
• A statement of your objectives and future plans,
• A list of what you see as keys to your success, and (if you are seeking investors)
• Any relevant financial information such as start-up costs, funding required, and how you will use investor funding.

Although the executive summary is the first section in the business plan, because it is a summary of the rest of your business plan, it is often written last.

Venture Overview

The venture overview is a top-level depiction of your company.

It contains the:

Description of the Venture

• Vision Statement
• Mission Statement
• Goals & Objectives
• Keys to Your Success

The first part of your venture overview is a description of your venture.

The description of your venture should include what you do (a brief description of your products or services), the value you provide to customers, your current operating status or a brief history of the venture, and a short description of the industry or niche in which you compete.

How to Write a Vision Statement

After describing your venture, a vision statement is a very simple, 5 to 10 word sentence or tagline that expresses the fundamental goals of your firm. Good vision statements reflect your company’s long term passion and purpose, often in a way that evokes emotion.

Take a look at the vision statements below for some inspiration:

Disney —  To make people happy. Oxfam —  A world without poverty. Stanford —  To become the Harvard of the West. Marriott —  To be the #1 hospitality company in the world. Microsoft —  A computer on every desk and in every home; all running Microsoft software.

How to Write a Mission Statement

After having crafted your vision statement, you should also create a mission statement. A mission statement explains your company's goals in terms of what you do for your customers. A good mission statement should tell your reader what your company does, who you do it for, and why you do what you do.

Check out these excellent examples of compelling mission statements:

Patagonia —  “Our Reason For Being: Build the best products, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” Trader Joes —  “Our mission is to give our customers the best food and beverage values that they can find anywhere and to provide them with the information required to make informed buying decisions. We provide these with a dedication to the highest quality of customer satisfaction delivered with a sense of warmth, friendliness, fun, individual pride, and company spirit.” Facebook —  "Founded in 2004, Facebook's mission is to give people the power to build community and bring the world closer together. People use Facebook to stay connected with friends and family, to discover what's going on in the world, and to share and express what matters to them."

Goals and Objectives

In this section of the business plan, break down your most important short-term and long-term goals and objectives.

Aim for five to seven of your most important short and long term goals.

This subsection of your venture description should be kept short. You will come back to your goals at the end of your business plan.

However, your key short-term and long-term goals should be highlighted early on in your business plan as well. The rest of your business plan will act as evidence of how you plan on achieving your goals.

Keys to Success

Your keys to success are your insights into what it takes to be successful in your industry, market, or niche.

Your keys to success can include several of the most important milestones that you will need to accomplish in order to achieve your goals.

These may include providing high quality products and services, your ability to attract customers or users and gain market share, or even your ability to develop the technology to deliver your products or services.

Your keys to success may also include the major milestones that you will need to reach along the way in order to achieve your vision. You will come back to your milestones and objectives at the end of your business plan.

Product or Service Description

The product or service description section is where you will go into detail in describing your products or services.

Not only will you describe your product in more detail, you should also discuss the uniqueness of your product, and what gives you an advantage over your competitors.

These are the three main parts of the Product (or Service) Description:

Description of Products or Services

Uniqueness of product, competitive advantage.

In this subsection of your business plan, describe the products or services you will provide, why they are a fit in the market, and how you will compete with similar products and services.

Begin by clearly describing the products or services you will provide. Make sure to explain the features and characteristics of your products and services. Your product or service description does not have to be highly technical. Rather, in addition to describing the features, focus on highlighting the advantages and benefits associated with your products or services.

Also, let your reader know why your product or service is needed. How does your product or service differ from those offered by your competitors? How does it better fill your customers wants and needs?

This is where you tell your reader why your solution is unique. Is it different from everything else out there? How is it different? Why would potential users choose your product or service over your competitors? In order to stand out, you need to distinguish yourself in some way.

To describe your product or service’s uniqueness, you may want to come up with a unique value proposition (or unique selling point). A value proposition is a short description of what you do, who you do it for, and how this benefits them.

A value proposition is similar to a mission statement. However, it differs in that a mission statement is written from the perspective of the company, while a value proposition is written from the perspective of the customer.

Your value proposition should be the center of your customer messaging. It should be front and center on your website, in your marketing materials, and in your advertising.

Here a few examples of great value propositions:

Dollar Shave Club —  A Great Shave for a Few Bucks a Month. No Commitment. No Fees. No B.S. Unbounce —  Build, Publish, & A/B Test Landing Pages Without IT Freshbooks —  Small Business Accounting Software Built for You, the Non-Accountant Skype —  Skype Keeps the World Talking, for Free. Share, Message, and Call - Now with Group Video on Mobile and Tablet Too.

What makes you better than competitors?

Does your competitive advantage come from superior products and services, customer service, technical support, logistics, price? What are the factors that give you an advantage over your competitors?

Clearly defining your competitive advantage is important.

Your competitive advantage is not just some abstract concept. It is at the core of how you deliver value to your customers. Your competitive advantage lays the foundation for your business model and should be a key component of your strategic plans.

Common areas where businesses find competitive advantages include:

• Intellectual Property
• Resources/Capital
• Economies of Scale
• Knowledge/Experience
• Connections and Network
• Customer Service
• Technical Support
• Customization
• Brand Recognition/Loyalty

Industry and Market Analyses

The industry and market analysis is the “big picture” view of your industry and market.

Conducting an industry and market analysis is going to take a good deal of research. You will likely need to research your industry, your competitors, and your customers. But do not rush through this section of your business plan.

A good understanding of your industry and market is critical to your success. By understanding the forces at play within your industry, you will be better able to find additional ways to create value that will allow you to succeed in the current and anticipated competitive environment.

Conducting an industry and market analysis can be intimidating, especially if you do not know what to look for or how to find the information you need. In the next section, we will discuss what should be included in your industry analysis. Then, we will tell you where to begin looking.

Industry Analysis

The industry analysis is a big picture analysis of the industry you will compete in. What does your overall industry look like today? There are a number of insights that will help you assess the attractiveness of your idea and form a big picture view of the industry and segment you are considering competing in.

Key insights to be alert for include:

• The dominant economic features of the industry
• The industry’s driving forces
• The industry’s competitive environment
• The competitive position of major players and key competitors
• Key industry success factors

To arrive at meaningful insights from your industry analysis, try to find answers to the following questions:

• What primary products or services are provided by your industry?
• What is the size and trajectory of the industry?
• What was the annual growth rate of the industry over the past year? Three years? Five years? Ten years?
• What is the forecasted annual growth rate over the next three years? Five years? Ten years?
• What is the average profitability of firms in your industry?
• What trends are affecting your industry?
• Who are the major customer segments served by your industry?
• Who are the major players in your industry?
• Who will be your key competitors in your industry?
• What key factors determine success or failure?

Industry Research

Now that you have a better idea of what to look for, you will need to know where to begin your search. There are a number of great free resources to begin looking for industry research. However, the first step is to determine the industry you are in.

While by this point, you should have some idea of the industry you are in, it is not always so clear. You could try an internet search to see what information you can find on your industry, but you will also want to find the NAICS code. You can do a NAICS Code Lookup and find the NAICS Code for LLC that matches your industry.

Here, you use the NAICS identification tool to drill-down through a list of industries to find the appropriate NAICS code for your business.

Once you know your industry, you can begin collecting more information about the industry trends and trajectory.

www.Bizstats.com provides free industry statistics including industry averages for income statement revenues and expenses, balance sheets, and key financial ratios. This is very helpful in making financial forecasts and setting benchmarks.

The US Census Bureau also provides several tools to help you conduct industry research:

• The Economic Census provides information on employer businesses, including data sorted by industry, state, region, and more.
• Statistics of US Businesses (SUSB) provides additional data on US businesses by enterprise size and industry. Both of these tools may help in conducting your industry analysis.

Target Market Analysis

Once you have a better understanding of the industry, you can begin to narrow down to your target market. In this section of the business plan you describe who your target market is and what you know about them.

What is a target market? Your target market is the specific group of customers to whom your product is intended. And no, it is not everyone. Although many new venture founders would like to sell their product or service to everyone, you should focus your efforts on your most likely customers.

Narrowing your target market requires understanding the three types of markets for your products or services. Your venture’s market can be narrowed down into three categories, the TAM, the SAM, and the SOM.

The total available market (TAM) is the total market for your products and services. Everyone in the universe who might be your customer.

The serviceable available market (SAM) is the subset of the total market that you can actually reach. Although anyone in your universe might be your customer, you are limited in your ability to reach them all.

The share of market (SOM) is the subset of the serviceable available market that you will actually reach. These are your most likely customers. Your target market.

Target markets can be segmented in many different ways. The idea is to narrow down to your most likely customers. This is where your focus should be.

Ways you can segment the market include:

• Demographic (e.g., age, gender, family size, education, income)
• Geographic (e.g., country, state, region, city, neighborhood)
• Psychographic (e.g., benefits sought, personality, social class, lifestyle)
• Behavioral (e.g., benefits sought, usage, attitude, loyalty)

Once you understand who your target market segments are, you will be able to start determining how you can reach them. To do this, consider:

• Where does your target market get information to make purchasing decisions?
• What is it they are looking for when considering buying this product/service?
• What will your target market pay attention to?

Market Research

To determine your target market and conduct a market analysis, you will most likely have to do market research.

Market research is the collection, analysis, and interpretation of data related to your target market and target customer to support strategic decision making.

There are two types of market research : secondary market research, and primary market research.

Secondary market research is the collection, analysis, and interpretation of data that has already been collected for other purposes. Secondary market research may include the collection of data from a number of sources such as the U.S. Census Bureau, consumer agencies, and for-profit organizations.

Primary market research is the collection of new information to gain a further understanding of the problem at hand. Primary market research involves you collecting the data or hiring a market research firm to collect data for you. This is you going out and actually collecting the opinions of your potential customers.

Common methods of primary market research include customer observation, focus groups, customer surveys, and customer interviews .

Because primary market research typically takes more time to complete and may incur significant costs , secondary market research is often conducted before conducting primary market research. This allows you to gather enough insights that you can narrow your primary market research to those more likely to be your customers.

To begin conducting secondary market research, consider these sources:

Think with Google provides a number of free tools and resources to help you find and understand your target market. From tools like Find My Audience and an Insights Library to a wealth of information on customer trends and the consumer journey, Think with Google is a valuable tool in conducting your market analysis.

City Town Info provides free statistics on people and places, colleges and universities, and jobs and careers. You can search for data on more than 20,000 U.S. communities at the city and state levels.

Google Trends is another useful tool for conducting market research. Google Trends allows you to explore what people are searching on the internet. You can examine trending topics, see trends by year, or search your own topic to discover interest over time, by region, or by related queries.

Social Mention allows you to conduct a real-time social media search for topics across more than 100 social media platforms. Social Mention provides you with information on the sentiment behind topic mentions, top keywords, top hashtags, and the social media platforms where these topics are being discussed.

Needless to say, there are several other great sources for both industry and market research. The key is to get creative to find the data and information to both guide your strategy as well as justify your business opportunity.

Competitive Analysis

Once you understand your industry and market, you should also include an analysis of your major competitors.

Your competitors may include anyone offering alternatives to your solution that people are using now to solve the same problem.

You will want to understand and explain who your competitors are along with their market share , price, major competitive advantages and disadvantages, and what makes your product unique from theirs.

Start by identifying the major competitors within your industry. You should focus on your closest competitors. Those that compete with you directly.

Next, for each competitor, describe their strategies, their strengths, and their weaknesses. In doing so, try to answer the following questions:

• What are their primary products and or services?
• Who are their target customers?
• What differentiates your product or service from theirs?
• What is their pricing strategy?
• What is their marketing strategy?
• What is their main message or value proposition?
• What are their strengths and weaknesses?
• What are their competitive advantages?

You should complete a competitive analysis for your top three to five competitors. Doing so will allow you to gain a much better perspective on the competitive landscape and may provide insight into how you can distinguish yourself from your competitors and even how you can take advantage of areas where your competitors fall short.

Marketing Plan

The marketing plan depicts the overall strategy your venture pursues to capture market share.

The marketing plan describes all aspects of marketing for your venture, including the product, price, place, and promotion . This includes a big picture view of your marketing strategy, your planned marketing mix, as well as your pricing strategy, sales strategy, and advertising strategy.

The marketing plan should be well informed by your industry and market analysis. By now, you have a plethora of knowledge about who your target customer is, the problem and pain points that you are alleviating for them, and how your competitors are positioned. All of this knowledge allows you to hone your marketing plan to reach your target market with the right message in the channels they turn to for information.

Marketing Strategy

The first section of your marketing plan is your marketing strategy. Your marketing strategy refers to your overall strategy of how you will market your product. How will you get your message out to your potential customers?

Your marketing strategy should consider the four essential elements of marketing:

The 4 Ps of Marketing:

The product is everything the customer gets, whether it be a physical product, a service, or an experience.

It is what you deliver. This includes the product or service itself, along with its branding, packaging, labeling, and even benefits.

The price is what you charge. What the customer gives you. Your business plan should discuss your pricing strategy and where this fits in your marketing mix.

Are you competing on price and thus offer low pricing? Or are you focusing on value at a medium price point? Or maybe you are positioned as a luxury label or item, and compete at a high price point? Why did you choose this strategy? Does it fit with your target market and within your marketing mix?

Location refers to where your customers find you, or where you find them.

While much of today’s marketing is done online, location is still as important as ever. Once you understand the place, you will have a much better idea on how to deploy your marketing mix. Where do your ideal customers get their information? Where do they shop? What forms of social media do they use?

Promotion is how you tell customers about your products and services.

Simply put, promotion is how you raise awareness of your products, services, or brand. Promotion strategies may include public relations, content creation and curation, marketing, and advertising.

But, keep in mind, your promotional strategies should be focused on one thing: your target customer and the strategies and messaging that works for them.

Your Marketing Mix

Your marketing mix is how you allocate resources to the marketing channels that you plan to pursue. In this section of your marketing plan, you will describe the marketing messaging and channels that you plan to use, and why these are appropriate for your target market.

Inbound Marketing

Inbound marketing, or content marketing, is a form of marketing designed to draw traffic to your website by providing valuable content to your target market. This is often achieved by posting useful web content, content, videos, and blogs.

The idea behind inbound marketing is pretty simple- by providing knowledge and information on your products, services, and other information that is valuable to your customers, you generate more leads and, hopefully, more sales.

Social Media Marketing

With over 3.5 billion people around the world using social media, social media marketing is another powerful tool to reach potential customers.

Social media marketing has many advantages, including allowing you to get your message in front of your specified target audience at little to no cost.

Although there is an overabundance of social media channels to choose from. Focus on the ones that your target market uses to get their information.

For instance, if your target market is middle age or older people, you may want to focus on platforms that are more popular with these demographics such as Facebook, Twitter, and Pinterest. However, if your target market is teen agers and young adults, you are more likely to find them on platforms such as Instagram and TikTok.

The Power of Video Marketing

Do not forget to discuss the use of video marketing in your marketing mix.

In both inbound and social media marketing, video has begun to play an increasingly important role. Video marketing can be employed in inbound marketing, email marketing, and social media marketing to serve a variety of purposes. The most common uses of video marketing include explainer videos, presentation videos, testimonial videos, sales videos, and video ads.

Not only can video marketing be used in a variety of methods and contexts, it is a highly consumed type of advertising. In fact, in 2020, 96% of consumers watched an explainer video to find out more about a product or service. Video works. And marketers believe this too. 92% of marketers who utilize video marketing say that it is a key part of their marketing strategy.

Email Marketing

Depending on the type of venture your company is, email marketing may also be an important element in your marketing mix. A good email marketing strategy balances gaining new customers with keeping your existing customers engaged with your company.

Although you do not want to overdo it, and a lot of email marketing seems “spammy”, email marketing can be very effective in the right form. Welcome notes, confirmation emails, informational emails, newsletters, digital magazines, promotional emails, and seasonal and birthday campaigns are just a few of the many types of email marketing.

Referral Marketing

Another common type of marketing in a company's marketing mix is referral or recommendation marketing. Referral or recommendation marketing can take many forms. Referral marketing might include good old organic word-of-mouth marketing wherein you ask customers for referrals, or even a formal system for rewarding customers who refer new clients.

Pricing Strategy

The Marketing Plan section of the business plan should also describe your pricing strategy. How are you going to price your products and services?

There are a number of ways you can approach pricing:

Markup Pricing —  Markup pricing is pricing based on your costs, plus a predetermined markup. The amount you mark up your product or service is usually expressed as a percentage, known as the gross margin. Markup pricing is most often found in high volume manufacturing industries where manufacturers must cover the cost of the products they are making.

Competitive Pricing —  Competitive pricing is pricing based on your competitors prices for similar products or services. Competitive pricing is most often seen in products or services where there are numerous competitors or substitutes.

Value Pricing —  Value pricing is pricing based on the value or perceived value that you deliver to your customers. In value-based pricing, you set the prices of your products and services in line with what the customer believes your product or service is worth. Value-based pricing is most often seen in higher value products and services, those that cater to self-image, or those that are niche or unique.

Penetration Pricing —  Penetration pricing is setting a low initial price, and then raising it as demand increases. Penetration pricing is designed to capture market share. It is a strategy often used by a new business or in launching new products and services. The idea is to set the price low enough to draw customers from your competition.

Price skimming —  Price skimming pricing is setting a high initial price and then reducing this price as the market evolves. Price skimming is most often used on new or trendy products and services. As initial demand slows and alternatives or competitors emerge, the high initial pricing must then be lowered to stay competitive in the market.

Sales Strategy

A sales strategy is how you plan on selling your products or services to your target market. This includes your sales channels (where will your product or service be available for sale) as well as how you will sell your product or service.

Your sales strategy depends on your business model and the nature of your business. If your business involves retailing, food services, or personal services where your customers come to you to make a purchase, your sales strategy may be quite simple (or even unnecessary to income). However, if your business involves personal selling, you may need a more thought-out sales strategy.

Some questions to ask to determine and document your sales strategy in your business plan:

• Will your products or services be available on your website?
• On a third-party website?
• In retail locations?
• In your own stores?
• In other retail stores?
• Directly to consumers? (Business to Consumer or B2C)
• To businesses? (Business to Business or B2B)
• Cold calling?
• Networking?
• Inside salespeople?
• Outside sales representatives?
• Sales through strategic partners?

Advertising Strategy

An advertising strategy is how you plan to use sponsored, non-personal messaging to reach and inform potential customers of your product, service, or brand.

Your advertising plan should describe the mediums you are going to advertise in , who you are targeting advertising in these mediums, your advertising message(s), and your advertising budget. A good advertising plan is also measurable, so be sure to consider how you are going to measure the effect of your advertising strategy to see if it is working.

Advertising Mediums

The most common advertising mediums typically fall into the categories of traditional advertising and digital advertising.

Traditional advertising includes print advertising such as newspapers, magazines, flyers, direct mail, and even billboards, as well as radio and tv advertising.

Digital advertising includes email advertising, search engine advertising, website advertising, social media advertising, influencer advertising, among many, many more.

The secret to finding the right advertising strategy and advertising mediums for your business is knowing where to find your most likely customers. Where is your target market, and where do they go to get their information?

Organizational Plan

The organizational (or management) plan describes:

• The legal form of the business
• Its organizational structure
• The background and roles of the leadership team
• Key personnel that are already in place or you will need to fill.

Organizational Type and Structure

The first part of your organizational plan describes your organizational type and structure . Who owns your company? And what is its legal business structure?

There are four primary types of organizational structures:

Sole Proprietorships

Partnerships.

• Limited Liability Companies (LLCs)

Corporations

Sole Proprietorships and Partnerships are informal business structures , while LLCs and Corporations are more formal business structures .

The best type of structure for your business will depend on your business’s particular characteristics and needs. A partnership structure may be the best choice for some businesses, while an LLC or a corporation might work better for others.

Sole proprietorships are an informal type of business structure. While many businesses start out as sole proprietorships because they are an informal business structure the owner is liable for 100% of the business's liabilities and risks. Thus sole proprietorships are typically not the preferred ownership structure for small businesses.

Similar to a sole proprietorship, a partnership is also an informal type of business structure. While a sole proprietorship involves only one owner, a partnership is a business structure with two or more partners where there is still no legal distinction between the owners of a partnership and their business.

An LLC is a formal business structure that distinguishes the owners from the business itself.

LLCs offer the personal liability protection of a corporation with the pass-through taxation of a sole proprietorship or partnership.

It is the simplest way of structuring your business to protect your personal assets in the event your business is sued.

LLCs can be owned by one or more people, who are known as LLC “members.” An LLC with one owner is known as a single-member LLC, and an LLC with more than one owner is a multi-member LLC.

LLCs require operating agreements . Operating agreements are legal documents that outline the ownership and member duties of your LLC. This agreement allows you to set out the financial and working relations among business owners ("members") and between members and managers.

Recommended: Learn how to form an LLC in your state using our free guides.

A corporation is a legal business entity that is owned by shareholders, run by a board of directors, and created through registration with the state.

Corporations offer limited liability and tax benefits but are required to follow more complex operating procedures than their counterpart, the limited liability company (LLC).

Ownership and Executive Team

Now it’s time to sell the single most important element in your business plan. You!

This subsection of your business plan tells readers who is in your ownership and executive team and outlines the accomplishments of your team.

You should include a short profile on each member of your ownership and executive team that will play a role in company decision making.

Who is on your ownership and executive team? What roles will each perform? What knowledge, experience, and accomplishments do you and your team bring to the table? What roles do you still need to fill, and how and when do you plan on filling them?

It is well known that many investors consider the experience and ability of the ownership and management team to be just as important as the idea itself. Do not pass over this opportunity to highlight how your knowledge, experience, and accomplishments set you up to succeed.

Also, remember that when you are writing your descriptions of your ownership team, talk about your accomplishments- as opposed to experience. Accomplishments signify that you have a track record and can get things done.

Key Personnel

This section of the business plan highlights the key personnel associated with the business . This may include members of the management team outside of the owners and executive management, the board of directors, and any outside advisors.

Here, include profiles on each key figure associated with your company, focusing on their accomplishments and the knowledge and skill they bring to the business.

Operational Plan

The operational plan describes how you will operate. The processes, strategies, and resources that you will use to operate your business on a daily basis.

This includes descriptions of production (if you produce a product) or the process you will use to carry out your service. The operational plan may also include, as necessary, descriptions of your logistics and supply chain, physical resources and needs, human resources and needs, technological resources and needs, and timetables for carrying out your plan.

Production Plan or Service Description

The production plan or service description explains how you are going to make and deliver your product(s) or provide your service(s). Although the production plans for products and services may look slightly different, both describe how your company will operate in the day-to-day.

If you are making a product , the production plan is where you will describe the process for making the product. What are your methods of production? What are the steps in your processes? How will you ensure quality? Maintain inventory? Handle Logistics?

If you are providing a service , the production plan is where you can describe the process you go through providing that service. What are your service methods? What will your sales and customer service look like? What is the customer experience like?

Most importantly, which of these might give you an advantage over your competitors? If you have any superior methods, processes, or other advantages, make sure to highlight them in your production plan or service description.

Logistics and Supply Chain

This section of the business plan describes your logistics and where you fall within the supply chain in your industry.

If you produce a product , you should discuss how you source materials, where your materials come from, and who your suppliers are. You will also need to discuss how you handle inventory, how you warehouse, and how you distribute your product(s).

If you are a service business , you may still have to discuss how you source materials used in your service, who your suppliers are, and how you handle inventory.

Physical Resources

In this section of the operational plan, you describe the physical resources that you have and the physical resources that you need to acquire. Think through everything you might need. This will become important when it is time to make financial projections.

• What facilities, machinery, equipment, and supplies do you require?
• Do you require raw materials?
• Who will be your primary suppliers?
• Secondary suppliers?
• Do you have back up suppliers and contingency plans if you cannot acquire raw materials?

Technological Resources

You should discuss the technological resources that you are developing, have, or need to create or acquire. Technological resources may include any software, applications, or websites that you have or will need to create, outsource, or purchase.

• What hardware or machinery will you require?
• What software or applications will you require?
• Can you purchase the software and applications you need?
• Are the software and applications you will need off-the-shelf or specialty?
• Will you have to create the software and applications you need?
• Do you need a website?
• Will you create and maintain your website inside the company or have it created and maintained by someone else?

Human Resources

Here, you describe the people that are a part of your team, and the human resources that you need to add to your team, hire, or outsource. Since you have already described the ownership and management team as well as key personnel, this section is more focused on production level workers and lower management.

• How much staffing will you need?
• What skills will your staff require?
• What will your staffing typically look like?
• How will you recruit, train, and retain employees?

Goals, Milestone, and Risk

The goals, milestones, and risks section of your business plan is the place to outline your goals, set key milestones, and explore and explain your preparation for the risks you will face.

Goals lay the foundation of where you intend to take your company and how you are going to get there. It is important to ascertain the short and long-term goals for your company.

Your goals should be connected to your mission and vision, your business model, and your strategic plans. They should also reflect your ambition to move the company forward and are often reflected in key performance indicators (KPIs) , such as numbers of users and customers, revenues, expenses, retention, satisfaction, and other indicators of performance.

Here are some questions to help you develop the goals for your company:

• When do you expect to break even?
• What do you expect your revenue to be in one year? Three years? Five years?
• What market share do you expect to capture in the next year? Three years? Five years?
• Where do you plan to expand from here?
• What KPIs do you need to achieve or improve?
• When do you expect to implement major objectives?
• What level of customer satisfaction do you hope to achieve?

When developing your goals, in addition to defining what your goals are, you also need to consider the how , the when , and the who . First, consider how your goals will get accomplished? What actions need to be taken to achieve your goals? What milestones do you need to accomplish along the way?

Your goals should also include your plan on when you plan on attaining each goal . Not only will your readers be curious about when you plan to achieve your goals, due dates and deadlines make for really powerful motivators.

Finally, you should also determine who is going to be responsible for working toward each goal. In a sole-proprietorship or startup it may be you, the business owner, or your founding team. However, as your organization grows, it will become more and more important to define who is responsible for pushing toward and achieving each goal.

SMART Goals

Your goals should be SMART: S pecific, M easurable, A ttainable, R ealistic, and T imely.

• Specific —  Your goals should be clear and specific. They should be narrow enough that you can determine the appropriate steps to attain them. In addition to what , in planning your goals, do not forget to be specific about how , when , and who . How will your goals be attained? When do you anticipate achieving them? Who is going to be responsible?
• Measurable —  Your goals should be measurable. There should be some objective metric or performance indicator by which you can tell if you have met your goals? How are you going to measure your goals? What metrics or performance indicators will you use? How will you know if you achieve your goals?
• Attainable —  Your goals must also be realistic and attainable. For a goal to be attainable you must be able to achieve it. Do not be afraid to push yourself, but setting unrealistic goals will cast doubt on your entire business plan. Ask yourself, can your goals be accomplished? By you? What will it take to attain them?
• Relevant —  Your goals also need to be relevant. To be relevant, they should contribute to the mission, vision, and success of your venture. Do your goals align with your company’s values? Are they within the scope of and aligned with your operational plan? Your marketing plan? Are they within the budget?
• Timely —  Your goals should also be timely and time-bound. Their process and progress should be clearly defined and they should have a starting and ending date. Without a timeframe, there is no sense of urgency, or motivation to get started. Make your goals time-bound. How long do you expect it to take? When do you plan on getting started? When do you anticipate achieving each goal?

Milestones are important events in your venture’s growth that mark significant change or stage of development.

Creating a list of milestones can act as a checklist of what you need to accomplish for your venture to reach its goals. They tell the story of how you are going to get from where you are to where you are going.

Milestones might include major events and accomplishments, such as:

• Forming an LLC
• Writing a Business Plan
• Securing Seed Capital
• Develop a Prototype
• Begin Production
• First Major Sale
• Reach 10,000 Downloads
• Achieve 1,000 Paying Customers

It is alright to list a few milestones that you have already completed. Or to leave them in your business plan once you complete them. Accomplished milestones show that you are making traction.

Milestones act as a signal to potential investors and other stakeholders what to expect from your venture and when to expect it. They also signal whether the venture is progressing and growing as expected.

Implementation Timeline

The implementation timeline is where you describe where your company is in its lifespan . You should set a timeline to reach your goals and milestones. This should include a short-term timeframe as well as where you anticipate being in the long term.

This section of the business plan should not be long. A simple chart will do. You can find several free timeline templates online to plug in your milestones and the time frame you expect to achieve them.

You will also want to include a section in your business plan showing that you understand the critical risks that your business may be subject to . The risks you will face in your business include both internal and external risks. These are any areas that expose your venture to any kind of loss- assets, customers, sales, profits, and reputation, among others.

By exploring your assumptions and identifying possible risks in those assumptions, you can show that you have assessed and are prepared to handle risks and threats that may arise. There are several tools available to analyze business risks, including SWOT Analysis and contingency planning .

SWOT Analysis

You may want to conduct a SWOT analysis or even include it in your business plan. A SWOT analysis is an analysis of your strengths, weaknesses, opportunities, and threats.

A SWOT analysis can help you understand your industry and market, your venture, and the strategies that you should pursue.

To conduct a SWOT analysis, you will need to assess factors both inside and outside your venture.

Here is how to conduct your own:

• What does your company do well?
• What are your company’s advantages?
• What do you do better than your competitors?
• What unique or low-cost assets do you have access to?
• What does your company not do well?
• What are your company’s disadvantages?
• What do your competitors do better than you?
• What needs to be improved?
• Where can you improve?
• Where can you grow?
• How can you turn your strengths into opportunities?
• How can you turn your weaknesses into opportunities?
• Do the trends of the industry or market represent a threat?
• Is the number of competitors growing?
• Do changes in technology or regulation threaten your success?
• Do your weaknesses represent a threat?

Contingency Plans

After assessing your risks and your SWOT analysis, you should address any major threats or risks that your venture faces with contingency plans.

Contingency plans are plans to help mitigate these risks by establishing a plan of action should an adverse event happen.

Contingency plans show that you understand the threats and risks to your venture, and you have a plan in place to lessen the damage should these risks emerge. There are various ways to prepare for adverse events. One is through planning- identifying alternatives and determining the best course of action. Another is business insurance.

Business Insurance

Business insurance protects against risk from several sources. The type of business insurance you will need varies greatly depending on the nature of your business.

While there are standard types of coverage like general liability insurance , professional liability insurance , workers’ compensation , insurance for commercial property and commercial auto insurance , there are also insurance policies that cover specific business activities and specialized equipment.

You can bundle most of these into what is called a Business Owner’s Policy (BOP) by a trusted insurance provider to get you started doing business.

Financial Statements

Your financial statements should include detailed projections of your income statement , cash flow statement, and balance sheet for the first year. You should also provide quarterly projections for the first three (or preferably five) years as well.

You also will likely need to include some sort of financial statement in your business plan. If you are a new venture, you will supply pro forma financial statements. Pro forma financial statements are simply financial projections.

Financial statements can help you to evaluate the cash needs of your venture, determine whether your venture is feasible and desirable, compare your expected returns with the alternatives, identify milestones and benchmarks, and demonstrate the value of your venture to investors.

Financial Assumptions

Before you begin completing your financial statements, you should first sit down and list the assumptions you will rely on to project your financial statements .

These should include projections concerning your:

• Initial revenue level per month
• Your growth and factors affecting growth
• Your inventory and inventory turnover
• And your operating expenses.

One of the biggest mistakes new ventures make is in making unrealistic assumptions .

Remember, revenue assumptions are key assumptions in determining whether your business will be viable. However, many entrepreneurs are overly optimistic about their revenue assumptions and tend to underestimate their expenses.

In order to make more accurate financial assumptions, back up your assumptions with data whenever possible. To find data to back up your assumptions, look for things like industry averages, market trends, and comparisons with similar ventures. You should already have a substantial amount of this data from your industry and market research.

Pro Forma Income Statements

The income statement , also known as the profit and loss statement , is a statement that shows the projections of your venture’s income and expenses over a fiscal year. On the income statement, you will detail your revenue and sources of revenue based on the assumptions you have made. You will also detail your anticipated expenses and use these to estimate your net income.

The typical income statement includes:

• Revenue —  the total amount of sales, or revenue, projected to be brought in by your business.
• Cost of Goods Sold —  the total direct cost of producing your product or delivering your service.
• Gross Margin —  the difference between revenue and cost of goods sold.
• Operating Expenses —  this section of your income statement details all of the expenses associated with operating your business. Common operating expenses might include rent, utilities, office
• expenses, salary expenses, and marketing and advertising expenses, among others.
• Total Operating Expenses —  the total of your operating expenses, excluding interest, depreciation, and taxes.
• Operating Income —  the difference between your gross margin and operating expenses.
• Interest, Depreciation, and Taxes —  this section of your income statement lists your non-operating expenses- expenses such as interest, depreciation, amortization, and taxes.
• Net Profit —  the total of how much you actually made. This is calculated by subtracting interest, depreciation, and taxes from your operating income.

Pro Forma Cash Flow Statements

The cash flow statement is a financial statement that shows when and where cash (and cash equivalents) flow in and out of your venture. This tells you how much cash you will have on hand at any single point in time.

• Cash from Operating —  Cash flowing into and out of your venture from operating, beginning with “cash on hand.” Cash flowing into your venture from operating includes cash from sales, payments from credit sales, investment income, and any other types of cash income related to operations. Cash flowing out of your venture from operations, your expenses, includes costs of raw goods, materials, inventory, salary expenses, office expenses, marketing and advertising expenses, rent, interest, taxes, insurance, or any other expenses that are paid by the venture.
• Capital Cash Flow —  Cash flow, in or out of the venture, for capital assets such as the purchase or sale of fixed assets.
• Cash from Financing —  Cash flow from financing includes cash flowing in or out of your venture relating to venture financing activities. Inflows of cash from financing include the investments by founders or owners, any loans taken out during the period, or the issuance of any equity. The outflow of cash from financing may include the payment of the principal of any loans, along with the repurchase of any outstanding equity.

Pro Forma Balance Sheet

The balance sheet is a financial statement that balances a venture's finances at a specific point in time. It describes how much the company is worth. The balance sheet uses the accounting equation: assets = liabilities + equity . In fact, these are the main components of the balance sheet:

• Assets —  Resources that hold economic value. A business's assets include current assets and fixed assets. Current assets are resources that can be accessed in the short term. These include cash, accounts receivable, inventory, and other currently available resources. Fixed assets are resources that are intended for long-term use but hold economic value. These include land and buildings, machinery and equipment, furniture and fixtures, vehicles, and other fixed resources.
• Liabilities —  What the business owes. Like assets, a business’s liabilities are also current liabilities and long-term liabilities. Current liabilities are liabilities that are due within 12 months. Current liabilities include accounts payable, loans, and taxes. Long-term liabilities are liabilities that are due after one year. These include long-term loans, notes, and other long-term debts.
• Equity —  What the owners or shareholders own. Equity is also composed of two parts: Capital and Retained Earnings. Retained earnings is the amount of profit that has been retained by the company over the life of the venture. Capital earnings , then, is what’s left. It is what has been invested. For new ventures, this may be the founder’s or early investors’ initial investments. For larger corporations, this would be the value of their shares of stock.

Break-Even Analysis

The break-even analysis shows you how much you have to sell before you break even. The break-even analysis uses fixed and variable costs in order to determine the sales volume you have to attain to reach a break-even point. This is the point where your sales volume covers both your fixed costs and your variable costs.

The break-even point is most often expressed as a number of units. You can calculate the break-even point by dividing fixed cost by the average profit per unit (average price per unit minus the variable cost).

Break-Even Point = Fixed Costs/ Profit Per Unit (Avg. Price - Avg. Variable Costs)

You can also calculate the break-even point in terms of $ of sales. To calculate the break-even point in $ of sales, you can divide total fixed costs for the period by the contribution margin ratio (net sales minus total variable cost / net sales).

Break-Even Point ($ of Sales) = Fixed Costs / Contribution Margin Ratio Contribution Margin Ratio = (Net Sales - Total Variable Cost) / Net Sales

Startup/Funds Required

If you are writing your business plan for the purpose of seeking funding, you should conclude your business plan by describing the investment opportunity.

With your financial projections in place, you will now be able to determine the amount of startup capital or investment you require.

This is because the funding you need is highly dependent on your profit and loss, cash flow, and break-even point. With well-researched assumptions and the evidence to back them up, you are ready to make the case that your business is worth the investment and will be able to pay it back or reward investors in the future.

In this section of the business plan, you will need to explain the amount of funding you are requesting as well as describe what those funds will be used for. The startup funding request will need to cover all expenses (maybe even your own personal expenses) at least until you reach your break-even point.

Business Plan Appendices (Optional)

If you have additional evidence to support your business idea, your business model, or your ability to achieve your goals and meet your financial objectives, you may want to consider including it as an appendix to your business plan.

Additional / Optional Evidence

Owners’ Resumes —  One thing you may want to consider including in your business plan is the resume for each owner. Investors often invest as much in the startup team as they do in the idea itself. Illustrations of Product —  Another helpful appendix is pictures or illustrations of your product. These are especially helpful for new products or those which are difficult to depict with words. Storyboard of Customer Experience — If your business is a service business, you could also consider including a storyboard depicting your customer’s experience. Customer Survey Results — You can also include any market research that you have conducted in an appendix. Showing that you have solicited feedback from real customers or potential customers provides further credence to your venture and venture idea.

Develop Your Business Idea

Before writing your business plan, it is important to take some time to develop your business idea .

If you are starting a new company, there are likely many details of the venture that have not been fully worked through. If you already have an existing venture, the following tools can also be useful in evaluating your business model:

• A three-sentence business plan

The Lean Canvas

The business model canvas, three-sentence business plan.

An easy place to start is with a three-sentence business plan . The three-sentence business plan is easy to construct, and consists of three parts:

• your product or service
• your market and marketing
• your revenue model.

Your Product or Service

The first sentence of your business plan clearly yet simply states your business's primary product or service. This includes the what and the where.

Example: “CoffeeMe is an upscale bakery and coffee shop specializing in imported coffees and international delicacies that will be located in downtown Atlanta.”

Your Market(ing)

The second sentence of your three-sentence business plan describes who your target market is and how you will promote to them.

Example: “CoffeeMe’s target market is urban professionals living and working in downtown Atlanta, marketed and promoted through traditional advertising, company partnerships, and social media.”

Your Revenue Model

The third sentence of your three-sentence business plan explains your revenue model. How will you make money?

Example: “CoffeeMe’s revenue model includes one-time retail sales as well as a unique subscription model featuring all-you-can-drink coffee for subscribers.”

Put it all together, and you have your three-sentence business plan:

Example: “CoffeeMe is an upscale bakery and coffee shop specializing in imported coffees and international delicacies that will be located in downtown Atlanta. CoffeeMe’s target market is urban professionals living and working in downtown Atlanta, marketed and promoted through traditional advertising, company partnerships, and social media. Our revenue model includes one-time retail sales as well as a unique subscription model featuring all-you-can-drink coffee for subscribers.”

Another useful tool for developing your business idea is the Lean Canvas . The Lean Canvas takes a problem-solution approach to helping you plan your business, focusing on the problems you are solving for your customers.

The Lean Canvas helps you describe and visualize your problem, solution, customers, value proposition, key performance indicators, and competitive advantage.

The steps to complete the Lean Canvas are:

• Define your target customers or users
• List the problems you are solving for them and how they are currently solving those problems today
• Describe your solution
• Explain your unique value proposition
• Describe your revenue streams
• Depict how you will reach customers
• Define the key metrics that will tell if you are doing well
• Detail your cost structure
• Explain your unfair advantage

The Lean Canvas, created by Ash Maurya, and licensed under Creative Commons Attribution-Share Alike 3.0 Unported License: https://leanstack.com/lean-canvas

The Business Model Canvas helps you describe and visualize the key aspects of your venture including your customers, value proposition, infrastructure, and revenue and cost models.

If you have already completed a Lean Canvas, you will already have several of the central parts of the Business Model Canvas complete.

The steps to complete the Business Model Canvas are:

• Explain your value proposition
• Describe how you interact with customers
• List the key activities that you will need to do to deliver on your value proposition
• List the key assets that you will need to deliver on your value proposition
• Describe the key partnerships that you will need to put in place to deliver on your value proposition

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8 Components of a Business Plan

Back to Business Plans

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on February 19, 2023 Updated on February 27, 2024

A key part of the business startup process is putting together a business plan , particularly if you’d like to raise capital. It’s not going to be easy, but it’s absolutely essential, and an invaluable learning tool. 

Creating a business plan early helps you think through every aspect of your business, from operations and financing to growth and vision. In the end, the knowledge you’ll gain could be the difference between success and failure. 

But what exactly does a business plan consist of? There are eight essential components, all of which are detailed in this handy guide.

1. Executive Summary 

The executive summary opens your business plan , but it’s the section you’ll write last. It summarizes the key points and highlights the most important aspects of your plan. Often investors and lenders will only read the executive summary; if it doesn’t capture their interest they’ll stop reading, so it’s important to make it as compelling as possible.

The components touched upon should include:

• The business opportunity – what problem are you solving in the market?
• Your idea, meaning the product or service you’re planning to offer, and why it solves the problem in the market better than other solutions.
• The history of the business so far – what have you done to this point? When you’re just getting started, this may be nothing more than coming up with the idea, choosing a business name , and forming a business entity.
• A summary of the industry, market size, your target customers, and the competition.
• A strong statement about how your company is going to stand out in the market – what will be your competitive advantage?
• A list of specific goals that you plan to achieve in the short term, such as developing your product, launching a marketing campaign, or hiring a key person. 
• A summary of your financial plan including cost and sales projections and a break-even analysis.
• A summary of your management team, their roles, and the relevant experience that they have to serve in those roles.
• Your “ask”, if applicable, meaning what you’re requesting from the investor or lender. You’ll include the amount you’d like and how it will be spent, such as “We are seeking $50,000 in seed funding to develop our beta product”. 

Remember that if you’re seeking capital, the executive summary could make or break your venture. Take your time and make sure it illustrates how your business is unique in the market and why you’ll succeed.

The executive summary should be no more than two pages long, so it’s important to capture the reader’s interest from the start. 

• 2. Company Description/Overview

In this section, you’ll detail your full company history, such as how you came up with the idea for your business and any milestones or achievements. 

You’ll also include your mission and vision statements. A mission statement explains what you’d like your business to achieve, its driving force, while a vision statement lays out your long-term plan in terms of growth. 

A mission statement might be “Our company aims to make life easier for business owners with intuitive payroll software”, while a vision statement could be “Our objective is to become the go-to comprehensive HR software provider for companies around the globe.”

In this section, you’ll want to list your objectives – specific short-term goals. Examples might include “complete initial product development by ‘date’” or “hire two qualified sales people” or “launch the first version of the product”. 

It’s best to divide this section into subsections – company history, mission and vision, and objectives.

3. Products/Services Offered 

Here you’ll go into detail about what you’re offering, how it solves a problem in the market, and how it’s unique. Don’t be afraid to share information that is proprietary – investors and lenders are not out to steal your ideas. 

Also specify how your product is developed or sourced. Are you manufacturing it or does it require technical development? Are you purchasing a product from a manufacturer or wholesaler? 

You’ll also want to specify how you’ll sell your product or service. Will it be a subscription service or a one time purchase?  What is your target pricing? On what channels do you plan to sell your product or service, such as online or by direct sales in a store? 

Basically, you’re describing what you’re going to sell and how you’ll make money.

• 4. Market Analysis 

The market analysis is where you’re going to spend most of your time because it involves a lot of research. You should divide it into four sections.

Industry analysis 

You’ll want to find out exactly what’s happening in your industry, such as its growth rate, market size, and any specific trends that are occurring. Where is the industry predicted to be in 10 years? Cite your sources where you can by providing links. 

Then describe your company’s place in the market. Is your product going to fit a certain niche? Is there a sub-industry your company will fit within? How will you keep up with industry changes? 

Competitor analysis 

Now you’ll dig into your competition. Detail your main competitors and how they differentiate themselves in the market. For example, one competitor may advertise convenience while another may tout superior quality. Also highlight your competitors’ weaknesses.

Next, describe how you’ll stand out. Detail your competitive advantages and how you’ll sustain them. This section is extremely important and will be a focus for investors and lenders. 

Target market analysis 

Here you’ll describe your target market and whether it’s different from your competitors’.  For example, maybe you have a younger demographic in mind? 

You’ll need to know more about your target market than demographics, though. You’ll want to explain the needs and wants of your ideal customers, how your offering solves their problem, and why they will choose your company. 

You should also lay out where you’ll find them, where to place your marketing and where to sell your products. Learning this kind of detail requires going to the source – your potential customers. You can do online surveys or even in-person focus groups. 

Your goal will be to uncover as much about these people as possible. When you start selling, you’ll want to keep learning about your customers. You may end up selling to a different target market than you originally thought, which could lead to a marketing shift. 

SWOT analysis 

SWOT stands for strengths, weaknesses, opportunities, and threats, and it’s one of the more common and helpful business planning tools.   

First describe all the specific strengths of your company, such as the quality of your product or some unique feature, such as the experience of your management team. Talk about the elements that will make your company successful.

Next, acknowledge and explore possible weaknesses. You can’t say “none”, because no company is perfect, especially at the start. Maybe you lack funds or face a massive competitor. Whatever it is, detail how you will surmount this hurdle. 

Next, talk about the opportunities your company has in the market. Perhaps you’re going to target an underserved segment, or have a technology plan that will help you surge past the competition. 

Finally, examine potential threats. It could be a competitor that might try to replicate your product or rapidly advancing technology in your industry. Again, discuss your plans to handle such threats if they come to pass. 

5. Marketing and Sales Strategies

Now it’s time to explain how you’re going to find potential customers and convert them into paying customers.  

Marketing and advertising plan

When you did your target market analysis, you should have learned a lot about your potential customers, including where to find them. This should help you determine where to advertise. 

Maybe you found that your target customers favor TikTok over Instagram and decided to spend more marketing dollars on TikTok. Detail all the marketing channels you plan to use and why.

Your target market analysis should also have given you information about what kind of message will resonate with your target customers. You should understand their needs and wants and how your product solves their problem, then convey that in your marketing. 

Start by creating a value proposition, which should be no more than two sentences long and answer the following questions:

• What are you offering
• Whose problem does it solve
• What problem does it solve
• What benefits does it provide
• How is it better than competitor products

An example might be “Payroll software that will handle all the payroll needs of small business owners, making life easier for less.”

Whatever your value proposition, it should be at the heart of all of your marketing.

Sales strategy and tactics 

Your sales strategy is a vision to persuade customers to buy, including where you’ll sell and how. For example, you may plan to sell only on your own website, or you may sell from both a physical location and online. On the other hand, you may have a sales team that will make direct sales calls to potential customers, which is more common in business-to-business sales.

Sales tactics are more about how you’re going to get them to buy after they reach your sales channel. Even when selling online, you need something on your site that’s going to get them to go from a site visitor to a paying customer. 

By the same token, if you’re going to have a sales team making direct sales, what message are they going to deliver that will entice a sale? It’s best for sales tactics to focus on the customer’s pain point and what value you’re bringing to the table, rather than being aggressively promotional about the greatness of your product and your business. 

Pricing strategy

Pricing is not an exact science and should depend on several factors. First, consider how you want your product or service to be perceived in the market. If your differentiator is to be the lowest price, position your company as the “discount” option. Think Walmart, and price your products lower than the competition. 

If, on the other hand, you want to be the Mercedes of the market, then you’ll position your product as the luxury option. Of course you’ll have to back this up with superior quality, but being the luxury option allows you to command higher prices.

You can, of course, fall somewhere in the middle, but the point is that pricing is a matter of perception. How you position your product in the market compared to the competition is a big factor in determining your price.

Of course, you’ll have to consider your costs, as well as competitor prices. Obviously, your prices must cover your costs and allow you to make a good profit margin. 

Whatever pricing strategy you choose, you’ll justify it in this section of your plan.

• 6. Operations and Management 

This section is the real nuts and bolts of your business – how it operates on a day-to-day basis and who is operating it. Again, this section should be divided into subsections.

Operational plan

Your plan of operations should be specific , detailed and mainly logistical. Who will be doing what on a daily, weekly, and monthly basis? How will the business be managed and how will quality be assured? Be sure to detail your suppliers and how and when you’ll order raw materials. 

This should also include the roles that will be filled and the various processes that will be part of everyday business operations . Just consider all the critical functions that must be handled for your business to be able to operate on an ongoing basis. 

Technology plan

If your product involves technical development, you’ll describe your tech development plan with specific goals and milestones. The plan will also include how many people will be working on this development, and what needs to be done for goals to be met.

If your company is not a technology company, you’ll describe what technologies you plan to use to run your business or make your business more efficient. It could be process automation software, payroll software, or just laptops and tablets for your staff. 

Management and organizational structure 

Now you’ll describe who’s running the show. It may be just you when you’re starting out, so you’ll detail what your role will be and summarize your background. You’ll also go into detail about any managers that you plan to hire and when that will occur.

Essentially, you’re explaining your management structure and detailing why your strategy will enable smooth and efficient operations. 

Ideally, at some point, you’ll have an organizational structure that is a hierarchy of your staff. Describe what you envision your organizational structure to be. 

Personnel plan 

Detail who you’ve hired or plan to hire and for which roles. For example, you might have a developer, two sales people, and one customer service representative.

Describe each role and what qualifications are needed to perform those roles. 

• 7. Financial Plan 

Now, you’ll enter the dreaded world of finance. Many entrepreneurs struggle with this part, so you might want to engage a financial professional to help you. A financial plan has five key elements.

Startup Costs

Detail in a spreadsheet every cost you’ll incur before you open your doors. This should determine how much capital you’ll need to launch your business. 

Financial projections 

Creating financial projections, like many facets of business, is not an exact science. If your company has no history, financial projections can only be an educated guess. 

First, come up with realistic sales projections. How much do you expect to sell each month? Lay out at least three years of sales projections, detailing monthly sales growth for the first year, then annually thereafter. 

Calculate your monthly costs, keeping in mind that some costs will grow along with sales. 

Once you have your numbers projected and calculated, use them to create these three key financial statements: 

• Profit and Loss Statement , also known as an income statement. This shows projected revenue and lists all costs, which are then deducted to show net profit or loss. 
• Cash Flow Statement. This shows how much cash you have on hand at any given time. It will have a starting balance, projections of cash coming in, and cash going out, which will be used to calculate cash on hand at the end of the reporting period.
• Balance Sheet. This shows the net worth of the business, which is the assets of the business minus debts. Assets include equipment, cash, accounts receivables, inventory, and more. Debts include outstanding loan balances and accounts payable.

You’ll need monthly projected versions of each statement for the first year, then annual projections for the following two years.

Break-even analysis

The break-even point for your business is when costs and revenue are equal. Most startups operate at a loss for a period of time before they break even and start to make a profit. Your break-even analysis will project when your break-even point will occur, and will be informed by your profit and loss statement. 

Funding requirements and sources 

Lay out the funding you’ll need, when, and where you’ll get it. You’ll also explain what those funds will be used for at various points. If you’re in a high growth industry that can attract investors, you’ll likely need various rounds of funding to launch and grow. 

Key performance indicators (KPIs)

KPIs measure your company’s performance and can determine success. Many entrepreneurs only focus on the bottom line, but measuring specific KPIs helps find areas of improvement. Every business has certain crucial metrics. 

If you sell only online, one of your key metrics might be your visitor conversion rate. You might do an analysis to learn why just one out of ten site visitors makes a purchase. 

Perhaps the purchase process is too complicated or your product descriptions are vague. The point is, learning why your conversion rate is low gives you a chance to improve it and boost sales. 

8. Appendices

In the appendices, you can attach documents such as manager resumes or any other documents that support your business plan.

As you can see, a business plan has many components, so it’s not an afternoon project. It will likely take you several weeks and a great deal of work to complete. Unless you’re a finance guru, you may also want some help from a financial professional. 

Keep in mind that for a small business owner, there may be no better learning experience than writing a detailed and compelling business plan. It shouldn’t be viewed as a hassle, but as an opportunity! 

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Innovation in Planning: The Untold Ingredient to Business Success

In the turbulent landscape of entrepreneurship, where over 20% of small ventures falter in their early days , this blog post sheds light on the importance of a well-structured business plan.

It delves into the specifics of an executive summary, steps, what to include, and innovation in business planning , guiding businesses to thrive rather than become failure statistics.

3 Main Purposes of a Business Plan

Embarking on the entrepreneurial journey without a business plan is like sailing in turbulent waters without a map.

A business plan serves three pivotal roles that steer the helm of a startup toward the shores of success.

1) Navigation Tool: Direction for Your Business

A business plan is your business’s North Star, providing direction and ensuring you stay on course amidst the storm of uncertainties.

Let’s take the example of “Bean There Coffee Shop,” a start-up that envisioned being a community hub. Their business plan outlined their mission, target market, competition analysis, and financial forecasts.

This helped them navigate the competition and establish a loyal customer base by providing a cozy ambiance that encouraged customer interaction.

2) Attraction for Investments: Encouraging Potential Investors

Your business plan is your passport to the realm of investors. Bean There Coffee Shop required a modern interior to reflect its brand's personality.

The detailed business plan showcased their unique selling proposition to investors, who were enticed by the predicted ROI and agreed to fund the renovations.

3) Measurement of Success: Evaluating Progress and Growth

A business plan sets a baseline to measure progress. Bean There Coffee Shop sets quarterly targets for customer retention and revenue in its business plan.

By comparing actual performance with the plan, they gauged their success and identified areas for improvement.

6 Key Elements of a Business Plan

Drafting a business plan might seem daunting initially, but breaking it down into core components makes it manageable and effective.

It’s about telling your business’s story in a compelling way to garner support and guide your actions.

1) Executive Summary

The executive summary is your business narrative condensed into a snapshot. For instance, the executive summary of Bean There Coffee Shop encapsulated its vision, mission, the experience it aimed to provide, and financial aspirations succinctly, giving readers an essence of what to expect in the subsequent sections.

For more information on executive summary design, delve into the design aspects of an executive summary. To glean insights on crafting a compelling and visually appealing executive summary for your startup venture.

2) Company Description

Delve into the what and why of your business. Bean There Coffee Shop described its longing to foster community interactions, reflecting its ethos in its service and interior design , resonating with the locals and creating a clientele.

3) Market Analysis

Understanding your market landscape is crucial. Analyze your competitors, the preferences of your target audience, and market trends.

For Bean There Coffee Shop, studying coffee consumption trends and identifying a locale lacking a community-centric cafe was a game-changer.

4) Organization and Management

Outline your business structure and team. Investors want to know who steers the ship.

At Bean There Coffee Shop, the experienced baristas and a seasoned manager showcased a competent team, instilling confidence in potential investors.

5) Product Line

Describe your offerings. Bean There Coffee Shop highlighted its organic coffee and locally sourced pastries, striking a chord with environmentally conscious consumers.

6) Marketing and Sales

How you plan to lure customers and keep them coming back is vital. Bean There Coffee Shop’s loyalty programs and community events were a hit, creating a buzz and building a loyal customer base.

What is a Business Plan in Entrepreneurship?

In the realm of entrepreneurship, a business plan goes beyond being just a document—it is a vibrant testament to your business vision and the roadmap illustrating how you aim to overcome challenges and achieve your objectives.

It's like the script of your entrepreneurial saga waiting to unfold.

A Framework for Strategy

A business plan embodies the strategy and operations of your entrepreneurial endeavor. Here's a simplified breakdown of what it may encompass:

Market Analysis: A thorough exploration of the market including size, demographics, and consumer behaviors.

Competitor Analysis: A detailed examination of competitors, their strengths, weaknesses, and market position.

Marketing Strategy: Tactics and channels you plan to use to promote your business.

Financial Projections: Anticipated income, expenses, and profitability over a certain period.

Risk Management

Venturing into entrepreneurship is akin to navigating turbulent waters, where risks are inevitable. A business plan aids in:

Identifying Potential Risks: Whether it's market fluctuation or operational challenges, a business plan helps in foreseeing possible hurdles.

Devising Contingency Plans: Strategies to mitigate identified risks, ensuring the business stays on the right track.

For instance, a cafe's business plan might highlight the risk of decreased foot traffic during winter months and propose hosting indoor events or offering seasonal promotions to maintain revenue.

Communication with Stakeholders

A business plan serves as a conduit between entrepreneurs and stakeholders, articulating the business vision, goals, and strategies.

When seeking investments for expansion, a well-drafted business plan can effectively communicate the growth potential and return on investment to investors, facilitating the funding process.

7 Steps of a Business Plan

Creating a business plan is a blend of art and science, distilled into seven systematic steps to ensure your entrepreneurial venture is on a trajectory toward success.

1) Research, Research, and Research

Before you set pen to paper, immerse yourself in thorough research about your industry, market, and competition. This step lays the groundwork for informed decision-making as you progress through subsequent stages of business planning.

Industry Insights: Delve into current industry trends, challenges, and opportunities to gain a comprehensive understanding.

Market Dynamics: Explore market demographics, customer preferences, and purchasing behaviors to tailor your business approach.

Competitor Analysis: Assess the strengths, weaknesses, and market positioning of competitors to identify your business’s unique selling proposition.

2) Defining Your Business Objectives

Having clear objectives is crucial. Whether it's capturing market share, hitting revenue targets, or achieving expansion goals, defining these objectives paves the way for a focused strategy.

Establishing well-defined objectives also serves as a yardstick for measuring your business’s performance over time.

3) Company Description

Articulate the ethos, offerings, and unique value proposition of your business.

Providing a compelling company description helps stakeholders, including potential investors and employees, to grasp your business's mission and the problems it aims to solve

4) Market Analysis

Delve into market trends, customer behavior, and competition analysis to tailor your strategies.

A robust market analysis provides the data necessary to target your audience effectively and position your business for success in a competitive landscape.

5) Organization and Management

Detail your organizational structure, key team members, and their expertise.

Illustrating a solid organizational structure demonstrates your business’s capacity to execute its strategies and achieve its objectives.

6) Service or Product Line

Describe your products or services, highlighting the benefits to customers. Detailing the attributes and advantages of your offerings allows stakeholders to understand the value your business brings to the market.

7. Marketing and Sales

Illustrate your marketing and sales strategy to attract and retain customers.

Outlining clear strategies for marketing and sales is crucial for driving business growth and achieving your financial objectives.

Market Positioning: Define how your products or services will be positioned in the market and how you intend to differentiate your offerings from competitors.

Promotional Strategies: Outline the various promotional tactics you will employ, such as social media marketing, search engine optimization, and paid advertising.

Sales Process: Describe the steps of your sales process from lead generation to closing sales, and identify the metrics you will use to measure sales effectiveness.

Customer Retention: Highlight the strategies for customer retention such as loyalty programs, excellent customer service, and regular engagement to keep customers coming back.

Pricing Strategy: Determine the pricing strategy that will be most effective for your market, considering factors like cost, competition, and perceived value.

Time to Master Your Business Pitch

Now that you have a robust business plan, it’s time to translate it into a compelling business pitch.

The mastery of your pitch lies in knowing your audience, presenting data compellingly, and choosing the right format for resonance.

Understanding Audience Expectations

Understanding your audience is pivotal. Tailoring your pitch to meet the expectations of investors, potential partners, or customers enhances its effectiveness significantly.

Here’s our CEO, Itai Amoza, discussing the key elements that make a presentation engaging:

Emphasizing Data Visualization for a Better Appeal

Visual presentation of data, through graphs or charts, can make complex information easily digestible.

Using the right data visualization tools can effectively narrate the story of your venture compellingly.

PDF (conservative) vs. Interactive

Choosing between a traditional PDF or interactive presentations like those on Storydoc or PowerPoint can significantly impact the engagement level of your audience.

Interactive formats allow for dynamic presentations with embedded videos and other multimedia elements making your pitch more engaging and memorable.

Consider Business Plan One-pager

Creating a one-page business plan rather than a multi-page business plan involves summarizing your business's essential aspects concisely.

This includes your value proposition, company overview, market analysis, the problem and solution, marketing strategy, financial projections, and a call to action for potential investors or partners.

Ready to Narrate Your Story? Begin with This Business Plan Template

Ah, the exhilarating journey of a startup. It's like crafting a story, with characters, plots, and a dash of suspense on what the next chapter brings.

Now, before you get swept away in this narrative, remember, that every good story needs a structured outline, and in the startup world, that outline is your business plan.

Pick a business plan one-pager template:

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I am a Marketing Specialist at Storydoc, I research, analyze and write on our core topics of business presentations, sales, and fundraising. I love talking to clients about their successes and failures so I can get a rounded understanding of their world.

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What should a business plan include?

1. the executive summary, 2. a description of the business, 3. the market(s) the business will operate in, 4. a swot analysis.

5. Management team and personnel

6. The products or services offered

7. marketing.

8. A financial plan

The contents of a business plan

This is placed as number one on our list of components of a business plan , but it can easily be the final stage. That's because sometimes it's easiest to write your summary after you've covered all the other details.

A great summary is one of the key features of a business plan. It serves as an overview of your entire business and the elements surrounding it.

Be sure to outline succinctly the 5 "W"s (Who, What, Why, When, Where) as well as the mission statement . Think about why you started the business along with where you would like it to be in the future, how will you get there? Your mission statement is the start of creating a culture that people in your organisation will live and work by.

This section should contain details of things such as your goals and the customers you will service. What are the products and services you will offer to your customers? You'll need to provide an overview of them and how they will address customers' needs and wants?

You've come up with this great business idea , but how will it do in the market? Or, more importantly, what is the market for it? How well do you know the market? What does a typical buyer look like, what is their income level? Does the business have the hallmarks of disruptive innovation ?

This is the time to research and determine who your target market is and ask specific questions that relate to your product or service. Put you idea to the test. What have others done before you and what can you do differently and better? Analyse what information you've uncovered and outline it's potential impact in your plan.

Create a detailed list of your strengths, weaknesses, opportunities and threats. This needs to be done with an open and honest approach, keep emotions out of it, focus on being objective when analysing your business and those of your competitors.

Any strengths you uncover will represent internal, positive factors in your business that are within your control. Weaknesses are also internal, but are negative factors that need to be improved.

Both opportunities and threats are external factors. While opportunities will potentially positively impact on your business, threats represent negative factors beyond your control. For example, are there high barriers to entering the market? Does a competitor have the market cornered due to brand loyal customers? These could harm your enterprise, so you need to strategise for it in your plan.

5. The management team and personnel

Who will run the business, who are the directors in the business? What are the skills of the management team and how do their different responsibilities make maximum use of their abilities. What is the chain of command in terms of decision making?

Also use this section to identify how the management team, and taking on employees will help maximise strengths, while addressing identified weaknesses to help improve the business.

Finally, which of the UK's business structures will you choose to operate through?

• Limited company
• Partnership
• Limited liability partnership

In this section you need to detail what will be produced and how it will be sold. You should  explain how your product or service will meet a particular need in the marketplace, and how you'll get customers returning to make repeat purchases. Repeat custom is after all the lifeblood of many a good business.

Who will you rely on, in terms of suppliers, to help you assemble your products? What intellectual property, patents or copyright do you own, or might you be at risk of potentially infringing?

What is the branding to your business? What are the key messages you want to communicate with your target market and how will you go about reaching them? How will you achieve market share and at what cost in terms of your budget?

8. Let's talk money: A financial plan

Ideas are great, but how will you make them a reality and sustain a viable business. Creating a financial plan will give you the opportunity to address your financial concerns and talk money, think about start-up costs, financial projections , funding and investor pitches.

You'll need to list how much your start-up will cost, everything from stationary to leases should be outlined and balanced against your financial projections.

Don't fear change, your business plan isn't written in stone

It’s important to remember that your business plan isn’t written in stone. This is a document that you and your staff can improve and update as the business grows and changes. Your plan should be reviewed regularly.

Consider implementing a monthly review to track progress or make adjustments to your strategy. Accountability and motivation are key in making sure your goals are met, think about the people involved and what can you do to keep them inspired.

This post was created on 26/06/2018 and updated on 18/02/2022.

Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.

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Business Plan Roadmap: Building Your Path to Business Success

Published: 31 December, 2023

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Table of Contents

In today’s fast-paced entrepreneurial landscape, a meticulously crafted business plan functions as the guiding star for your venture’s journey toward success. Whether you’re an experienced entrepreneur or a budding startup creator, possessing a comprehensive business plan is indispensable, serving as the key to securing funding, making well-informed decisions, and effectively navigating the ever-evolving business environment.

A skillfully developed business plan serves as the cornerstone of a prosperous venture, seamlessly aligning with crucial elements such as the Business Model Canvas and adapting to the ever-changing business environment . At Digital Leadership, we understand the importance of these strategic foundations, which is why we offer comprehensive Digital Strategy Consulting and Business Model Strategy services, to help businesses not only survive but thrive in today’s competitive landscape.

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Within the confines of this article, we will embark on a comprehensive exploration of the art of crafting an engaging and impactful business plan . We shall dissect critical components, including in-depth market research, meticulous financial projections, savvy marketing strategies, and effective operational blueprints. Additionally, we will unveil a plethora of tips and best practices designed to elevate your business plan above the competition, rendering it a value proposition for those seeking to invest in or collaborate with your enterprise.

What is a Business Plan

A business plan definition is a written document that outlines the goals, strategies, and detailed operational and financial plans of a business. It serves as a roadmap for the business, providing a clear direction for its growth and development. A typical business plan includes information about the company’s mission and vision, its products or services, market analysis, competition, target audience, marketing and sales strategies, organizational structure, financial projections, and funding requirements. Business plans are commonly used to secure funding from investors or lenders, guide the company’s operations, and communicate its vision and strategy to stakeholders.

A conventional business plan typically divides into two primary segments:

• The Explanatory Segment: This portion encompasses written content that serves the business purpose of providing a detailed description of the business idea and/or the company. It covers elements such as the executive summary, company overview, market analysis, product or service particulars, marketing and sales strategies, organizational structure, operational blueprints, and funding needs.
• The Financial Segment: Within this section, you’ll discover financial data and projections, encompassing income statements, balance sheets, cash flow forecasts, and detailed information regarding financing prerequisites and potential sources. This segment offers a quantitative view of the business’s financial situation and future expectations.

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Components of a Business Plan: What is Included in a Business Plan

Crafting a thorough and compelling business plan is a fundamental step for entrepreneurs and business leaders seeking to chart a successful course for their ventures. A well-structured business plan not only serves as a roadmap for your business’s growth but also communicates your vision, strategy, and potential to investors, partners, and stakeholders. The key components of a business plan make up a robust business plan, offering valuable insights and practical tips to help you create a document that inspires confidence and aligns your team with a shared vision. Each key element plays a critical role in constructing a business plan that not only secures financial support but also guides your organization toward sustainable success. Let’s delve deeper into these components, adding depth and clarity to your business plan ‘s narrative.

• Executive Summary: This should succinctly encapsulate the essence of your business plan . It should briefly touch on the market opportunity, your unique value proposition, revenue projections, funding requirements, and the overarching goals of the business.
• Company Description: Elaborate on your company’s history, including significant milestones and achievements. Clearly define your mission, vision, and values, providing insight into what drives the company’s culture and decisions.
• Market Analysis: Delve into the market’s nuances by discussing not only its size but also its growth rate, trends, and dynamics. Highlight specific target market segments, customer personas, and pain points that your business aims to address. Include a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to showcase your understanding of the competitive landscape.
• Products or Services: Offer a detailed explanation of your offerings, emphasizing their key features and benefits. Describe how these offerings fulfill specific customer needs or solve problems, and explain any proprietary technology or intellectual property.
• Marketing and Sales Strategy: Provide a comprehensive overview of your marketing and sales plans. Discuss your pricing strategy in depth, outlining how it aligns with market dynamics. Explain your distribution channels and marketing tactics, including digital and traditional methods.
• Organizational Structure: Present bios of key team members, underscoring their relevant experience, expertise, and roles within the organization. Include an organizational chart to illustrate reporting relationships and the structure’s scalability.
• Operational Plan: Go into detail about your daily operations, covering everything from production processes and supply chain management to facility requirements and technology utilization. Discuss quality control measures and scalability strategies.
• Financial Projections: Provide a thorough breakdown of financial forecasts, including monthly or quarterly projections for at least three to five years. Explain the assumptions behind these numbers, including factors such as market growth rates and pricing strategies. Highlight critical financial metrics like burn rate, customer acquisition costs, and return on investment.
• Funding Requirements: Specify the exact amount of capital you’re seeking, the purpose of the funds, and how the investment will be utilized to achieve specific milestones. Outline potential sources of funding, such as equity investment, loans, or grants. Clarify the expected terms and conditions.
• Appendix: In the appendix, include supplementary materials that reinforce your business plan’s credibility and depth. This can encompass market research reports, letters of intent, prototypes, patents, legal contracts, and any other relevant documentation that adds value to your case.

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Creating a business plan essential steps.

Creating a business plan is a crucial step in launching or growing a business. Here’s a step-by-step guide to help you create an effective business plan :

1- Draft an Executive Summary:

• Write a concise overview of your business, including the mission, vision, and goals.
• Summarize the business concept, target market, and unique value proposition.
• Keep it brief but compelling to grab the reader’s attention.

2- Compose a Business Description:

• Provide detailed information about your business, industry, and the problem or need your product/service addresses.
• Explain your mission, vision, and core values.
• Describe the legal structure of your business (e.g., sole proprietorship, LLC, corporation).

3- Conduct a Market Analysis:

• Conduct thorough market research to understand your industry, target market, and competitors.
• Define your target audience and demonstrate a clear understanding of market trends.
• Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats).

4- Outline Organization and Management:

• Outline the organizational structure of your business.
• Introduce key team members and their roles, highlighting their relevant experience.
• Provide an overview of your advisory board or external support.

5- Detail the Product or Service Line:

• Describe your products or services in detail.
• Highlight the features, benefits, and unique selling points.
• Explain how your offerings meet the needs of your target market.

6- Develop a Marketing and Sales Strategy:

• Develop a comprehensive marketing strategy to reach your target audience.
• Outline your sales process, distribution channels , and pricing strategy.
• Include a sales forecast and customer acquisition plan.

7- Specify Funding Request (if applicable):

• Specify the amount of funding you are seeking (if any) and how you plan to use it.
• Justify the funding request with clear financial projections and a solid business case.

8- Prepare Financial Projections:

• Prepare detailed financial statements, including income statements, balance sheets, and cash flow statements.
• Provide assumptions and methodologies used for financial forecasts.
• Demonstrate your business’s profitability and financial viability.

9- Include an Appendix:

• Include supplementary materials such as resumes, permits, contracts, market research, or any other relevant documents.
• Keep this section optional but use it to provide additional context.

10- Review and Revise:

• Review your business plan thoroughly for clarity, consistency, and completeness.
• Seek feedback from mentors, advisors, or potential investors.
• Revise the plan based on feedback and ensure it aligns with your business goals.

Remember, a business plan is a dynamic document that should be revisited and updated regularly to reflect changes in your business environment. It serves as a roadmap for your business and a valuable tool for communicating your vision to others.

Types of Business Plans

Startup business plan:.

A comprehensive document crafted by entrepreneurs to outline the vision, mission, target market, competition analysis, financial projections, and strategies for launching and operating a new business.

Feasibility Business Plan:

A plan designed to assess the viability of a business idea or project by analyzing market demand, potential challenges, financial feasibility, and overall sustainability before committing resources.

One-Page Business Plan:

A condensed version of a traditional business plan, focusing on key elements such as the business concept, target market, value proposition, marketing strategy, and financial projections—all presented on a single page.

What-If Business Plan:

A flexible and dynamic plan that explores various scenarios and outcomes based on changing factors or assumptions. It helps businesses anticipate challenges and adjust strategies accordingly.

Growth Business Plan:

Tailored for businesses aiming to expand, this plan outlines strategies for scaling operations, entering new markets, launching products or services, and includes financial projections to support growth initiatives.

Operations Business Plan:

Geared towards day-to-day activities, this plan details operational procedures, resource allocation, supply chain management, and other aspects essential for the smooth functioning of the business.

Strategic Business Plan:

A long-term plan outlining the organization’s mission, vision, core values, and strategic initiatives. It guides decision-making, sets priorities, and aligns the company toward achieving overarching objectives.

The purpose of a business plan

A business plan is not a static document with a limited shelf life; rather, it evolves alongside the company it represents. It serves as a dynamic tool that adapts to changing market conditions, emerging opportunities, and evolving strategic priorities. Here’s a closer look at its continuous relevance:

• Guiding the Business ( Business Concept/Business Idea and Strategy ) : A business plan serves as an internal guide that helps entrepreneurs and management teams set clear objectives, develop business strategies, and make informed decisions. It provides a framework for prioritizing tasks, allocating resources, and monitoring progress toward achieving business goals.
• Securing Financing: One of the primary reasons for creating a business plan is to secure financing from lenders, investors, or banks. A well-prepared plan presents a compelling case for why the business is a viable and profitable investment. It includes financial projections, market research, and a clear explanation of how the funds will be used to achieve growth.
• Attracting Investors: For startups and early-stage companies, attracting equity investors is often crucial for rapid growth. A comprehensive business plan not only showcases the business opportunity but also outlines how investors can potentially realize significant returns on their investment. It highlights the company’s unique value proposition and competitive advantage.
• Setting Goals and Objectives: Business plan s articulate both short-term and long-term objectives for the company. Specific, measurable, and time-bound goals are essential for motivating employees, aligning efforts, and tracking progress. Objectives can encompass revenue targets, market share goals, expansion plans, and more.
• Managing Operations: Business plans include detailed operational plans, covering aspects such as production processes, supply chain management, inventory control, quality assurance, and logistics. These operational details ensure that the business runs smoothly and efficiently.
• Market Analysis: Comprehensive market research within the business plan helps the company understand its target market, customer demographics, and competitive landscape. This knowledge enables the business to adapt to changing market conditions and identify opportunities for growth, product development, or market expansion.
• Communicating the Vision: A well-crafted business plan communicates the company’s mission, vision, and values to both internal and external stakeholders. This clarity fosters a shared sense of purpose among employees and resonates with customers and partners.
• Risk Management: Business plans identify potential risks and challenges that the company may encounter. By acknowledging these risks upfront, the plan can outline strategies for risk mitigation or contingency plans. This proactive approach helps the business better navigate unforeseen challenges.
• Measuring Progress: A business plan serves as a benchmark for assessing the company’s performance and growth. By comparing actual results to the plan’s projections, the business can identify areas where it is excelling and areas that require adjustment. Regularly measuring progress is crucial for making data-driven decisions.
• Exit Strategy: In some cases, especially for entrepreneurs and investors, a business plan includes an exit strategy. This strategy outlines how the business owners plan to realize their investment, whether through selling the company, going public, or transitioning leadership to others.
• Competitive Adaptation: In the face of a constantly changing competitive landscape, a well-maintained business plan allows a company to regularly assess its competitive position. It aids in identifying emerging competitors, market shifts, and areas where the business can gain a competitive edge.
• Performance Measurement: By providing a baseline for projected financials and key performance indicators (KPIs), a business plan becomes a tool for measuring actual performance against expectations. This ongoing evaluation enables the organization to identify strengths, weaknesses, and areas for improvement.
• Resource Allocation: As a company grows, it often requires additional resources such as capital, personnel, or technology. The business plan assists in rationalizing and justifying resource allocation decisions to support expansion or address operational challenges.
• Innovation and Adaptation: In today’s rapidly changing business environment, adaptation and innovation are essential. A business plan encourages a culture of adaptability by fostering discussions on new opportunities and strategies for staying ahead of industry trends.
• External Engagement: Externally, the business plan remains a valuable tool for engaging with investors, partners, lenders, and other stakeholders. It provides a transparent and comprehensive view of the company’s past performance and future potential.

Important External Tasks of a Business Plan

A business plan holds significance beyond its internal utility, as it acts as the company’s calling card in external contexts. Primarily, it serves as a persuasive tool for potential investors, bolstering the chances of securing essential financing, whether during startup or later stages for marketing initiatives or product development. Additionally, a well-crafted business plan proves valuable in negotiation discussions with potential key partners and regulatory bodies, enhancing the stability of current and future business relationships with customers and suppliers alike.

Here are some significant external tasks associated with a business plan:

• Securing Financial Support: One of the primary external objectives of a business plan is to attract external financing from investors or lenders. A well-prepared plan should clearly communicate the company’s financial requirements and how those funds will be utilized to achieve its objectives.
• Presenting to Investors: If you are seeking investment from angel investors, venture capitalists, or private equity firms, you must effectively present your business plan . This entails pitching your business to potential investors, highlighting key aspects of your plan, and addressing their inquiries and concerns.
• Applying for Financing or Grants: If you intend to secure loans or grants to fund your business, your business plan will be a crucial component of your application. It should demonstrate your capacity to repay loans or meet grant criteria, as well as how the funds will drive growth.
• Negotiating Partnerships and Collaborations: When pursuing partnerships, joint ventures, or alliances with other businesses, a business plan can outline the strategic advantages and potential outcomes of the collaboration. This is vital for persuading potential partners of the value of working together.
• Ensuring Regulatory Compliance: Depending on your industry and location, you may need to submit your business plan to regulatory agencies for approval or compliance. This is particularly common in sectors like healthcare, finance, and energy.
• Obtaining Licenses and Permits: If your business requires specific licenses or permits to operate, your business plan may be requested during the application process to demonstrate your readiness and compliance with regulations.
• Facilitating Mergers and Acquisitions: In mergers or acquisitions, both the acquiring and target companies may need to provide business plans to potential investors or lenders involved in the transaction. This aids in evaluating the financial viability and strategic fit of the merger or acquisition.
• Attracting Strategic Partners: In addition to traditional investors, you may seek to attract strategic partners who can offer resources, expertise, or distribution channels. You r business plan should compellingly illustrate why potential partners should collaborate with your company.
• Preparing for an IPO (Initial Public Offering): If your long-term strategy includes taking your company public, a comprehensive business plan is essential to attract public market investors. It must provide a detailed view of your company’s financial health, growth potential, and market position.
• Undergoing Due Diligence: When external parties consider investing in or partnering with your company, they often conduct due diligence. Your business plan should be precise and comprehensive to withstand scrutiny during this process.

When is a Business Plan Needed

When starting a new business, it makes sense to write a business plan . A strong business concept helps you find investors and convince big business figures, investors, or banks of your business idea.

In addition, a business plan forces a start-up to confront the strengths but also weaknesses of its business idea. However, an already existing company can equally benefit from a business plan. Many companies often lack a clearly recognizable strategy or guidelines against which success can be measured.

A business plan also leads to more transparency in entrepreneurial decisions and is necessary for an already existing company when raising outside capital and investors. An increasing number of investors and capital providers demand the submission of such a plan, thus making a strong business concept so important.

• Startup Phase : A business plan is essential when starting a new venture as it helps define your business concept, target market, and competitive strategy. It outlines your initial funding requirements, revenue projections, and expected milestones, providing a roadmap for the early stages of your business.
• Securing Financing : Whether you’re seeking a bank loan, angel investment, venture capital, or crowdfunding, a detailed business plan is a prerequisite. It should include financial forecasts, an analysis of your industry and competitors, and a clear description of how the funds will be used to grow the business.
• Strategic Planning : Regularly updating your business plan is crucial for strategic planning . It allows you to assess your company’s strengths, weaknesses, opportunities, and threats (SWOT analysis) and adjust your strategies accordingly. It provides a long-term vision and helps align the organization’s efforts toward common goals.
• New Product or Service Launch : Before launching a new offering, a business plan helps you research the market, understand underserved customer needs, and determine the product’s unique selling points. It outlines your marketing and sales strategy, pricing structure, and expected return on investment.
• Mergers and Acquisitions : In mergers and acquisitions (M&A) transactions, a business plan is used to evaluate the financial viability and strategic fit of the deal. It provides insights into the target company’s operations, revenue streams, and potential synergies with the acquiring company.
• Partnerships and Alliances : When exploring collaborations with other businesses, a business plan outlines the mutual benefits and objectives of the partnership. It clarifies roles and responsibilities, risk-sharing arrangements, and how the partnership aligns with each party’s strategic goals.
• Regulatory Compliance : Certain industries, like healthcare, finance, and energy, require businesses to submit comprehensive business plans to regulatory authorities. These plans demonstrate compliance with industry-specific regulations and provide transparency in operations.
• Licensing and Permits : When applying for licenses or permits, particularly in regulated industries such as food service, healthcare, or construction, a business plan may be necessary to prove that your operations meet safety, health, and environmental standards.
• IPO (Initial Public Offering) : Making a company public is a complex process. A thorough business plan is crucial to attract public investors. It should provide historical financial performance, future growth prospects, and a clear value proposition for potential shareholders.
• Crisis Management : In times of financial distress or operational challenges, businesses may develop a crisis management or turnaround plan. This specialized business plan outlines the steps needed to stabilize the company’s finances, restructure operations, and restore profitability.

Example of Business Plan Structure

Generally, there are no fixed guidelines as to how a business plan should be structured. Business concepts heavily depend on the recipient of the business plan and the orientation and structure of the company. The following bullet points are therefore only to be understood as basic building blocks that must be adapted to the individual situation.

1. Business Concept/Business Idea and Strategy:

• Illustrate your business concept, including the idea and methods for successful implementation.
• Include a timeline for implementing the concept.
• Optionally, provide information about your company and headquarters.

2. Company Description:

• Provide detailed information about your company, including its name, location, legal structure, and history.
• Explain your business’s purpose and the problems it aims to solve.
• Describe your target market and your business’s role within it.

3. Target Market:

• Market volume and potential.
• Growth potential.
• Barriers to entry and market restrictions.
• Supplier positioning.
• Relevant laws and regulations.
• Competitor analysis (strengths, weaknesses, product range).
• Identifying potential customers.

4- Operational Plan:

• Describe your business’s day-to-day operations, including location, facilities, equipment, and technology.
• Explain your supply chain, production processes, and quality control.
• Address any regulatory or compliance requirements.

5. Products and Services:

• Describe your products or services, highlighting how they differentiate from competitors.
• Unique Selling Proposition.
• Customer Benefits.
• Competitive Advantages.
• Innovation or optimization of existing products.
• Patent or property rights.

6. Marketing and Sales Planning:

• Outline your marketing strategy and timetable.
• Specify market entry plans.
• Set company goals related to market leadership, market share, revenue, and brand awareness.
• Discuss sales policy, pricing policy, and communication policy & advertising.
• Address sales methods, future developments, and pricing strategy justification.

7. Management, Employees, and Organization:

• Highlight management skills, qualifications, and key team members.
• Emphasize industry knowledge, social skills, previous successes, and professional experience.
• Mention personnel development strategies.
• Describe the organizational structure, focusing on procurement, development, production, sales, and administration.

8. Opportunities and Risks:

• In the ‘Opportunities’ section, showcase the potential of your business idea and the conditions for exploiting that potential.
• Address risks comprehensively, demonstrating a detailed and critical approach.
• Include potential risk scenarios and proposed solutions.

9. Financial Planning:

• Present concrete financial figures derived from previous analyses and plans.
• Profit Planning: Include a profit and loss statement (P&L).
• Balance Sheet: Provide an overview of assets, liabilities, and equity.
• Liquidity Plan: Compare expenditures with available funds.

10. Appendix:

• Include necessary documents like commercial register excerpts, business registrations, shareholder agreements, and legal forms.
• Attach CVs and references of key team members.
• Include relevant financial spreadsheets, patents, permits, licenses, brochures, leaflets, and organizational charts or graphs.

Reasons for Business Plan Failures

• Lack of Market Research: Failing to thoroughly understand the target market and its needs can lead to products or services that don’t resonate with customers.
• Inflexibility: A rigid plan that doesn’t adapt to changing market conditions or feedback from customers can become obsolete quickly.
• Overly Optimistic Projections: Unrealistic financial projections can mislead investors and hinder the business’s ability to meet expectations.
• Poor Execution: Even the best plan will fail without proper execution. A lack of skilled team members, resources, or a clear execution strategy can doom a business.
• Ignoring Competition: Ignoring or underestimating competitors can lead to a business being unprepared for market competition.
• Insufficient Funding: Underestimating the capital required to launch and sustain the business can lead to financial troubles.
• Inadequate Marketing: Without effective marketing, even great products or services may go unnoticed by potential customers.
• Ignoring Customer Feedback: Not listening to customer feedback and adjusting the business accordingly can result in products or services that don’t meet market needs.

Connecting The Dots: Importance of Business Model Canvas in Business Plan

Integrating the Business Model Canvas (BMC) into a traditional business plan is a pivotal process in crafting a comprehensive and highly effective business strategy . The Business Model Canvas , with its visual and succinct approach, offers a distinctive viewpoint on your business model. It functions as a complementary tool to the in-depth components of a traditional plan, strengthening your strategic capabilities. You can download it now.

The synergy between these two strategic instruments not only facilitates communication but also empowers you to analyze and adjust your business strategy with precision, ultimately fostering a pathway to success. In the following discussion, we delve into the significance of bridging the gap between these two potent tools within the domain of business planning. Here’s why the Business Model Canvas is essential within the context of a business plan:

• Visual Representation: The Business Model Canvas provides a visual framework that allows you to quickly grasp and convey the fundamental elements of your business model. This visual clarity is especially valuable when presenting your business concept to potential investors, partners, or team members.
• Concise Overview: While a traditional business plan can be lengthy and detailed, the BMC offers a concise summary of key components, including customer segments, value propositions, channels, revenue streams, and cost structures . It distills complex business concepts into a simplified format, making it easier to communicate and understand.
• Iterative Planning: The BMC encourages an iterative approach to business strategic planning . It enables you to experiment with different business model hypotheses and make adjustments as you gather feedback and insights. This agility is vital, especially for startups and businesses in rapidly evolving markets.
• Focus on Value: The Business Model Canvas places a strong emphasis on understanding customer needs and value creation . It prompts you to identify your unique value propositions and how they address customer pain points, aligning your strategy with customer-centric principles.
• Holistic View: By using the BMC, you’re prompted to consider all aspects of your business model, from customer acquisition to revenue generation and cost management. This holistic perspective helps identify potential gaps, dependencies, and opportunities that might be overlooked in a traditional plan.
• Alignment and Coordination: The BMC fosters alignment among team members and stakeholders. It’s a collaborative tool that encourages discussions about the business model, ensuring that everyone shares a common understanding and vision. This alignment is critical for execution.
• Integration with Traditional Plan: While the BMC is an excellent starting point, it can be seamlessly integrated into a traditional business plan. The insights and clarity gained from the BMC can inform and enrich the sections of the plan related to products/services, target market, marketing strategy, and financial projections.
• Efficiency: The BMC saves time and resources, particularly in the early stages of planning when you’re exploring different business model scenarios. It allows you to focus on the most critical aspects of your strategy before diving into the details.
• Adaptability: In a rapidly changing business environment, having a flexible and adaptable business model is essential. The BMC’s modular structure makes it easier to pivot or adapt your strategy in response to market shifts, competitive pressures, or emerging opportunities.

In summary, a business plan is a multifaceted and indispensable tool for businesses at every stage of their journey. It serves as a compass, guiding strategic decisions, securing essential financing, and attracting potential investors. Its ongoing relevance is a testament to its adaptability, enabling businesses to measure performance, allocate resources, and manage risks effectively. Beyond its practical utility, a business plan is a communication tool, conveying a company’s vision and objectives to both internal teams and external stakeholders. It is a dynamic and ever-evolving document that empowers businesses to navigate uncertainties, foster innovation, and drive sustainable growth, making it an indispensable companion in the pursuit of business success.

Frequently Asked Questions

1- how does a business plan relate to usiness strategy.

A business plan is closely intertwined with a company’s business strategy. The plan lays out the specific actions and tactics required to achieve the strategic goals of the business. It provides a roadmap for implementing the chosen strategy, outlining how resources will be allocated, what markets will be targeted, and how the business will position itself in the competitive landscape.

2- Is a business plan necessary if I already have a solid business strategy?

Yes, a business plan is still essential, even if you have a well-defined strategy. It serves as the detailed execution plan for your strategy, providing clarity on how you will achieve your strategic objectives. It also helps you anticipate challenges, manage risks, and secure financing or investments by demonstrating the viability of your strategy.

3- Can I use the Business Model Canvas in place of a business plan for a startup?

While the Business Model Canvas is an excellent tool for conceptualizing and validating your business model, it is often not a substitute for a comprehensive business plan , especially when seeking financing or investments. Startups may begin with Canvas to clarify their model but should eventually develop a full business plan to provide in-depth financial projections, market analysis, and operational details.

4- How often should I update my business plan to align with my evolving strategy?

It’s advisable to review and update your business plan regularly, typically at least once a year. However, major changes in your business environment, such as shifts in market conditions or strategic pivots, may require more frequent updates. Keeping your plan current ensures it remains a relevant and effective tool for guiding your business.

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Businessing Magazine

Strategizing     Logan    March 5, 2019     6 min read

10 Important Aspects of a Successful Business Plan

Every business needs to have a business plan, no matter the size. The main reason so many startups don’t survive past the first five years is because they didn’t set a strong business plan. You may have a great business idea, but then after setting out a plan and crunching the numbers, you find out it’s not such a great idea.

Your business plan is the roadmap for your business; it’ll contain future milestones, your budget and finances, marketing and sales strategy, and will help you overcome future obstacles. Whether your business plan is for bankers, venture capitalists, or just your employees, there are main elements set by the Small Business Administration ( www.sba.gov ) that should be included in every business plan.

What Are the Elements of a Business Plan?

• The Executive Summary This is the first section of the business plan. It can be from 1 to 5 pages. It serves as the table of content for your plan.
• Company Profile In this section, you explain what your business is, what your goals are, your vision, and mission, why you’re special and unique. Some companies mention the management and team members with short descriptions.
• Market Analysis Before starting a business, you need to learn about the market. Study your competitors. Find out their profit range, what they’re known for, and what technologies are used in the industry. Every detail matters and can give you an advantage in your business.
• Product/ Service Explain your products, different types or packages, your selling points, and answer all the questions a customer/ investor may have. Whoever reads your business plan should fully understand what you’re offering.
• Marketing and Sales Strategy The best product in the world wouldn’t sell if it has a poor marketing plan. Get into detail with how you’ll advertise your product. Detail your target audience, prices, and any promotional discounts.
• Funding This is the most important section in your plan because it states your initial budget, the funds you’ll need for the next five years, what you plan on doing with the funds, the creditors’ or investors’ return, and all business expenses such as salaries and equipment.
• Financial Forecast If you’re using your business plan for a loan or funds, you need to have the documents to back up your claim. You need to include all your financial statements and balance sheets, and any sources of income from the past few years.
• Business Overview Give a general overview of your business with info like the legal structure, operations plan, business address , whether it’s an online or physical business, number of employees, specific roles, etc.

What Are the Aspects of a Successful Business Plan?

Now that we’ve stated the main elements that should be included in a business plan, let’s get to the points you should focus on to create a successful business plan and not just a boring, lengthy one.

Use a Template or Hire Someone with Experience

You can write your business plan yourself, but with all the elements that need to be added, it can get complicated. If your business plan is short, then you might not need a template. If your plan is lengthy, you can find templates with a prepared structure online. In order to have a professional, well-written business plan, you can look into hiring someone with experience to get the job done. They would be able to better structure your plan and add charts and graphs when needed.

Do Your Research

Before jumping into writing your business plan, you need to ensure you’ve done an efficient amount of research. It’s your responsibility to have the answers to the questions that creditors or investors would ask. Whether it’s researching the market, competitors, or the industry, you need to know every small detail that can be an advantage or disadvantage to your business.

Define the Purpose of Your Business Plan

Your business plan will be your guide throughout the years, working as your roadmap, but you need to define why you’re creating it from the start. For example, are you making a plan for personal needs, as a guide for your employees, or are you planning on using it for investors and funding? If for funding, you’ll need to be very precise and clear with your targets and overall writing.

A Modified Business Plan

Your business plan is going to be read by various types of people from bankers, investors, and venture capitalists, to employees and yourself. Each audience type has certain points they’re looking for in your plan and you need to address those points accordingly. Make sure your plan can easily be modified according to your target audience. For example, banks would focus on balance sheets and statements while your employees will be focused on business goals or market research. You need to be able to make small alterations to serve different purposes.

Don’t Make It Too Long

The truth is no one is actually going to read your whole business plan. An executive summary is important so readers can easily find the sections they need. A typical business plan usually ranges from 20 to 50 pages. For example, venture capitalists are usually time restricted, so they’d want to find things like the financial forecast and investors’ return quickly. Knowing this, you should place this information in the beginning.

Regularly Update Your Business Plan

Your business plan needs to be updated as your business evolves and grows. Not all the sections will need updating, but the objectives set at the start of your business will change and your financial records will need to be up-to-date, especially if you’re still looking for funding. As mentioned before, your business plan is your roadmap, so don’t neglect it down the line.

Stand Out, but Don’t Overdo It

Your business plan is mostly stating the facts about your business but you need to capture the reader’s attention, mention why you’re different from your competitors, what makes you better. But sometimes businesses tend to oversell themselves, explain your passion, how much you care for your business, and the problems you want to solve but without unnecessary exaggeration.

Don’t Undersell Your Competitors

Every business has competitors and you need to clearly acknowledge these competitors in your business plan. Some startups think that not mentioning their competitors or underselling them helps their case, when in fact, it does the complete opposite.

You need to highlight what your competitors are good at, and state how you can do better. This will give you an edge with investors. Never talk bad about competitors or imply they’re not worthy of mentioning, this will lessen your credibility and make you look unprofessional.

Set Long-term and Short-term Goals

Every business plan should include five-year goals, but most importantly, it should include short-term goals such as annual and quarterly goals. It’s great to know where you want your business to be in the future, but investors need to know you have a clear plan to get there.

Back Up Your Plan with Documents, Charts, or Graphs

A business plan shouldn’t just be blocks of text; you need to make your plan appealing by adding images, charts, or graphs whenever possible. It won’t only improve your overall design; it can simplify and explain complicated sections. In order to strengthen your plan, you need to add supporting documents like articles about your business, financial statements, or contracts.

These were 10 important aspects that will help you create a successful and polished business plan. A great business plan from the start can change the trajectory of your whole business so giving it the right amount of work, focus, and dedication is vital for your business.

Logan is a passionate content creator, specializing in the business solutions sector. He loves to share his experience about technology, startups, entrepreneurs, and business-related updates.

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A financial plan vs. a pro-forma cash flow budget, what is the overall purpose of a business plan.

• What Are the Basic Components of a Business Plan?
• How to Compose a Small Business Plan

The key elements of a business plan are much the same, whether for a large business or a small business. This doesn't mean your business plan must be as thick as that of a Fortune 500 company, but it should include the same elements of a business plan found in business giants such as Amazon and Apple.

Executive Summary

An executive summary of your business plan provides the reader with a snapshot of your company profile and goals, according to the Small Business Administration . It's often the most neglected element of the business plan, but it may be the most important, because it tells investors why your business will be successful in very few words.

It should include a mission statement, a brief history of your business, and the highlights of your company's growth, your product or service and a summary of future plans. It also should explain why you are seeking financing and information about your banking and currency investors.

Product Description

The description of your product or service is one of the biggest components of a business plan. It begins with the way your product or service affects your customers. This description includes details concerning the product life cycle, any intellectual property issues, and any research and development activities planned. Include mention of any patents or proprietary components to your product (or service), as that is your moat.

Market Analysis

Market analysis describes your industry, gives information about the target market for your product or service and describes how your product or service will meet the needs of the target market. It discusses the size of the target market, the market share you hope to gain, the pricing of your product or service and your projected gross margin.

It discusses your competitors – who they are what part of the market they hold and their weaknesses and strengths. This section also discusses the barriers to your entry into the market and whether or not there are regulatory constraints that will impede your entry into the market.

Company Information

The section on your company should describe what you do and what needs your company can fulfill within the marketplace. This section also explains how your company's product or services specifically satisfy these needs. This section also should include a list of your customers and explain why your business will be a product or service will be successful.

Company Organization

The organization of your company is critical to investors who will want to know if they are lending to a corporation, a partnership or a sole proprietors. Regardless of your company's organization, lenders will want to know who is in charge what experience they have in this business, the extent of their ownership, and their record of accomplishment.

Each member of management should provide a resume, which may be included in an appendix to the business plan, that includes unique experience, past record of accomplishment, any industry recognition or community involvement, how long they have been involved with your company, and their salary. The names of the members of the Board of Directors along with their position on the board, the extent of their involvement with your company, their general background, and any contribution to the company's success should be discussed.

Marketing and Sales

The marketing and sales element of the business plan should discuss your business's marketing penetration strategy, a strategy for growing the business once market penetration has been achieved, the subsequent channels of distribution and a communications strategy suitable for reaching your customers. This also should include an overall sales strategy that outlines your selling activities.

Business Financials

You'll have to provide complete financial information as part of your business plan, says Entrepreneur . This is particularly important if you are making a request for funding. The financial data will include both historical information that is company income statements balance sheets and cash flows for the last three to five years. This section also will include financial projections on the impact of the new product the new service or the cash infusion.

Remember to format your business plan sections clearly and carefully. Presentation is important when showing your business plan to prospective business partners and investors.

• U.S. Small Business Administration: The Essential Elements of a Good Business Plan
• Entrepreneur: Elements of a Business Plan

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• 1 How to Write a Comprehensive Business Plan
• 2 How to Write a Business Synopsis
• 3 6 Types of Business Plans
• 4 How to Write Your Business Proposal

Table of Contents

What is a business plan, the advantages of having a business plan, the types of business plans, the key elements of a business plan, best business plan software, common challenges of writing a business plan, become an expert business planner, business planning: it’s importance, types and key elements.

Every year, thousands of new businesses see the light of the day. One look at the  World Bank's Entrepreneurship Survey and database  shows the mind-boggling rate of new business registrations. However, sadly, only a tiny percentage of them have a chance of survival.   

According to the Bureau of Labor Statistics, about 20% of small businesses fail in their first year, about 50% in their fifth year.

Research from the University of Tennessee found that 44% of businesses fail within the first three years. Among those that operate within specific sectors, like information (which includes most tech firms), 63% shut shop within three years.

Several  other statistics  expose the abysmal rates of business failure. But why are so many businesses bound to fail? Most studies mention "lack of business planning" as one of the reasons.

This isn’t surprising at all. 

Running a business without a plan is like riding a motorcycle up a craggy cliff blindfolded. Yet, way too many firms ( a whopping 67%)  don't have a formal business plan in place. 

It doesn't matter if you're a startup with a great idea or a business with an excellent product. You can only go so far without a roadmap — a business plan. Only, a business plan is so much more than just a roadmap. A solid plan allows a business to weather market challenges and pivot quickly in the face of crisis, like the one global businesses are struggling with right now, in the post-pandemic world.  

But before you can go ahead and develop a great business plan, you need to know the basics. In this article, we'll discuss the fundamentals of business planning to help you plan effectively for 2021.  

Now before we begin with the details of business planning, let us understand what it is.

No two businesses have an identical business plan, even if they operate within the same industry. So one business plan can look entirely different from another one. Still, for the sake of simplicity, a business plan can be defined as a guide for a company to operate and achieve its goals.  

More specifically, it's a document in writing that outlines the goals, objectives, and purpose of a business while laying out the blueprint for its day-to-day operations and key functions such as marketing, finance, and expansion.

A good business plan can be a game-changer for startups that are looking to raise funds to grow and scale. It convinces prospective investors that the venture will be profitable and provides a realistic outlook on how much profit is on the cards and by when it will be attained. 

However, it's not only new businesses that greatly benefit from a business plan. Well-established companies and large conglomerates also need to tweak their business plans to adapt to new business environments and unpredictable market changes. 

Before getting into learning more about business planning, let us learn the advantages of having one.

Since a detailed business plan offers a birds-eye view of the entire framework of an establishment, it has several benefits that make it an important part of any organization. Here are few ways a business plan can offer significant competitive edge.

• Sets objectives and benchmarks: Proper planning helps a business set realistic objectives and assign stipulated time for those goals to be met. This results in long-term profitability. It also lets a company set benchmarks and Key Performance Indicators (KPIs) necessary to reach its goals. 
• Maximizes resource allocation: A good business plan helps to effectively organize and allocate the company’s resources. It provides an understanding of the result of actions, such as, opening new offices, recruiting fresh staff, change in production, and so on. It also helps the business estimate the financial impact of such actions.
• Enhances viability: A plan greatly contributes towards turning concepts into reality. Though business plans vary from company to company, the blueprints of successful companies often serve as an excellent guide for nascent-stage start-ups and new entrepreneurs. It also helps existing firms to market, advertise, and promote new products and services into the market.
• Aids in decision making: Running a business involves a lot of decision making: where to pitch, where to locate, what to sell, what to charge — the list goes on. A well thought-out business plan provides an organization the ability to anticipate the curveballs that the future could throw at them. It allows them to come up with answers and solutions to these issues well in advance.
• Fix past mistakes: When businesses create plans keeping in mind the flaws and failures of the past and what worked for them and what didn’t, it can help them save time, money, and resources. Such plans that reflects the lessons learnt from the past offers businesses an opportunity to avoid future pitfalls.
• Attracts investors: A business plan gives investors an in-depth idea about the objectives, structure, and validity of a firm. It helps to secure their confidence and encourages them to invest. 

Now let's look at the various types involved in business planning.

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Business plans are formulated according to the needs of a business. It can be a simple one-page document or an elaborate 40-page affair, or anything in between. While there’s no rule set in stone as to what exactly a business plan can or can’t contain, there are a few common types of business plan that nearly all businesses in existence use.  

Here’s an overview of a few fundamental types of business plans. 

• Start-up plan: As the name suggests, this is a documentation of the plans, structure, and objections of a new business establishments. It describes the products and services that are to be produced by the firm, the staff management, and market analysis of their production. Often, a detailed finance spreadsheet is also attached to this document for investors to determine the viability of the new business set-up.
• Feasibility plan: A feasibility plan evaluates the prospective customers of the products or services that are to be produced by a company. It also estimates the possibility of a profit or a loss of a venture. It helps to forecast how well a product will sell at the market, the duration it will require to yield results, and the profit margin that it will secure on investments. 
• Expansion Plan: This kind of plan is primarily framed when a company decided to expand in terms of production or structure. It lays down the fundamental steps and guidelines with regards to internal or external growth. It helps the firm to analyze the activities like resource allocation for increased production, financial investments, employment of extra staff, and much more.
• Operations Plan: An operational plan is also called an annual plan. This details the day-to-day activities and strategies that a business needs to follow in order to materialize its targets. It outlines the roles and responsibilities of the managing body, the various departments, and the company’s employees for the holistic success of the firm.
• Strategic Plan: This document caters to the internal strategies of the company and is a part of the foundational grounds of the establishments. It can be accurately drafted with the help of a SWOT analysis through which the strengths, weaknesses, opportunities, and threats can be categorized and evaluated so that to develop means for optimizing profits.

There is some preliminary work that’s required before you actually sit down to write a plan for your business. Knowing what goes into a business plan is one of them. 

Here are the key elements of a good business plan:

• Executive Summary: An executive summary gives a clear picture of the strategies and goals of your business right at the outset. Though its value is often understated, it can be extremely helpful in creating the readers’ first impression of your business. As such, it could define the opinions of customers and investors from the get-go.  
• Business Description: A thorough business description removes room for any ambiguity from your processes. An excellent business description will explain the size and structure of the firm as well as its position in the market. It also describes the kind of products and services that the company offers. It even states as to whether the company is old and established or new and aspiring. Most importantly, it highlights the USP of the products or services as compared to your competitors in the market.
• Market Analysis: A systematic market analysis helps to determine the current position of a business and analyzes its scope for future expansions. This can help in evaluating investments, promotions, marketing, and distribution of products. In-depth market understanding also helps a business combat competition and make plans for long-term success.
• Operations and Management: Much like a statement of purpose, this allows an enterprise to explain its uniqueness to its readers and customers. It showcases the ways in which the firm can deliver greater and superior products at cheaper rates and in relatively less time. 
• Financial Plan: This is the most important element of a business plan and is primarily addressed to investors and sponsors. It requires a firm to reveal its financial policies and market analysis. At times, a 5-year financial report is also required to be included to show past performances and profits. The financial plan draws out the current business strategies, future projections, and the total estimated worth of the firm.

The importance of business planning is it simplifies the planning of your company's finances to present this information to a bank or investors. Here are the best business plan software providers available right now:

• Business Sorter

The importance of business planning cannot be emphasized enough, but it can be challenging to write a business plan. Here are a few issues to consider before you start your business planning:

• Create a business plan to determine your company's direction, obtain financing, and attract investors.
• Identifying financial, demographic, and achievable goals is a common challenge when writing a business plan.
• Some entrepreneurs struggle to write a business plan that is concise, interesting, and informative enough to demonstrate the viability of their business idea.
• You can streamline your business planning process by conducting research, speaking with experts and peers, and working with a business consultant.

Whether you’re running your own business or in-charge of ensuring strategic performance and growth for your employer or clients, knowing the ins and outs of business planning can set you up for success. 

Be it the launch of a new and exciting product or an expansion of operations, business planning is the necessity of all large and small companies. Which is why the need for professionals with superior business planning skills will never die out. In fact, their demand is on the rise with global firms putting emphasis on business analysis and planning to cope with cut-throat competition and market uncertainties.

While some are natural-born planners, most people have to work to develop this important skill. Plus, business planning requires you to understand the fundamentals of business management and be familiar with business analysis techniques . It also requires you to have a working knowledge of data visualization, project management, and monitoring tools commonly used by businesses today.   

Simpliearn’s Executive Certificate Program in General Management will help you develop and hone the required skills to become an extraordinary business planner. This comprehensive general management program by IIM Indore can serve as a career catalyst, equipping professionals with a competitive edge in the ever-evolving business environment.

What Is Meant by Business Planning?

Business planning is developing a company's mission or goals and defining the strategies you will use to achieve those goals or tasks. The process can be extensive, encompassing all aspects of the operation, or it can be concrete, focusing on specific functions within the overall corporate structure.

What Are the 4 Types of Business Plans?

The following are the four types of business plans:

Operational Planning

This type of planning typically describes the company's day-to-day operations. Single-use plans are developed for events and activities that occur only once (such as a single marketing campaign). Ongoing plans include problem-solving policies, rules for specific regulations, and procedures for a step-by-step process for achieving particular goals.

Strategic Planning

Strategic plans are all about why things must occur. A high-level overview of the entire business is included in strategic planning. It is the organization's foundation and will dictate long-term decisions.

Tactical Planning

Tactical plans are about what will happen. Strategic planning is aided by tactical planning. It outlines the tactics the organization intends to employ to achieve the goals outlined in the strategic plan.

Contingency Planning

When something unexpected occurs or something needs to be changed, contingency plans are created. In situations where a change is required, contingency planning can be beneficial.

What Are the 7 Steps of a Business Plan?

The following are the seven steps required for a business plan:

Conduct Research

If your company is to run a viable business plan and attract investors, your information must be of the highest quality.

Have a Goal

The goal must be unambiguous. You will waste your time if you don't know why you're writing a business plan. Knowing also implies having a target audience for when the plan is expected to get completed.

Create a Company Profile

Some refer to it as a company profile, while others refer to it as a snapshot. It's designed to be mentally quick and digestible because it needs to stick in the reader's mind quickly since more information is provided later in the plan.

Describe the Company in Detail

Explain the company's current situation, both good and bad. Details should also include patents, licenses, copyrights, and unique strengths that no one else has.

Create a marketing plan ahead of time.

A strategic marketing plan is required because it outlines how your product or service will be communicated, delivered, and sold to customers.

Be Willing to Change Your Plan for the Sake of Your Audience

Another standard error is that people only write one business plan. Startups have several versions, just as candidates have numerous resumes for various potential employers.

Incorporate Your Motivation

Your motivation must be a compelling reason for people to believe your company will succeed in all circumstances. A mission should drive a business, not just selling, to make money. That mission is defined by your motivation as specified in your business plan.

What Are the Basic Steps in Business Planning?

These are the basic steps in business planning:

Summary and Objectives

Briefly describe your company, its objectives, and your plan to keep it running.

Services and Products

Add specifics to your detailed description of the product or service you intend to offer. Where, why, and how much you plan to sell your product or service and any special offers.

Conduct research on your industry and the ideal customers to whom you want to sell. Identify the issues you want to solve for your customers.

Operations are the process of running your business, including the people, skills, and experience required to make it successful.

How are you going to reach your target audience? How you intend to sell to them may include positioning, pricing, promotion, and distribution.

Consider funding costs, operating expenses, and projected income. Include your financial objectives and a breakdown of what it takes to make your company profitable. With proper business planning through the help of support, system, and mentorship, it is easy to start a business.

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The 5 Key Elements Of A Good Business Plan

22 January 2020

Although some Founders are sceptical about planning too far ahead for their businesses, preparing a solid business plan is necessary for many purposes.

As any founder knows, the only sure thing about running a growing company is change.

In fact, your business plan is perhaps the thing that will change most often throughout your entrepreneurial journey.

Although some Founders are sceptical about planning too far ahead for their businesses, preparing a solid business plan is necessary for many purposes, including, but not limited to:

• Raising finance through investment;
• Applying for a business loan;
• Budgeting for the long and short term;
• Gaining a deeper understanding of how your business works.

Perhaps even more important than preparing a business plan, is making sure that this is updated for each of the small and big changes that your company will go through as it grows and evolves.

Different companies require different types of business plan. Depending on your business model, your revenue structure and many other factors.

However, there are 5 elements of a business plan that are absolutely key to making sure that the reader understands how your company works and plans on growing.

Download our editable Business Plan Template

It includes a complete structure , detailed instructions on how to write each section and tips on how to tweak it for each specific use .

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1. Executive Summary

The Executive Summary represents the reader’s first impression of your business

The Executive Summary is the first section of your business plan, and also the last one you should write. It represents the reader’s first impression of your business . As a result, it will likely define their opinion as they continue reading the business plan.

A good Executive Summary includes key facts about your business such as:

• Business & product description;
• Current positioning & targeting;
• Financial outlook & requirements;
• Past and future achievements & goals.

However, the most important function that a great Executive Summary serves is communicating to the reader why they should read the rest of the business plan , and why you want them to.

2. Business Overview

After the Executive Summary, a business plan starts with a comprehensive explanation of what your business proposition is and how it relates to the market where your company operates.

In this section of the business plan, you should explain precisely:

• what your company does;
• what are its products or services;
• in which market it operates;
• who are its customers.

When describing your business, you should make sure to that the reader knows what kind of market environment your business operates in, but also how it can thrive in such an environment from a competitive point of view.

For some very niche or particularly innovative sectors, this may mean that you need to inform the readers about specific market dynamics .

In these cases, make sure that you clarify what is considered ‘the industry standard ‘ in your sector, the selling points that current players are competing on and how your business is positioned relative to them.

Make sure to include:

• Your mission statement;
• The philosophy, vision and goals of your company;
• Your industry and target audience;
• The structure of your business, detailing your customers, suppliers, partners and competitors;
• Your products and services and the problem they solve;
• Unique Selling Point(s).

If the company already has a well-defined product or service, this section can be divided into Company Description and Products & Services .

3. Sales & Marketing Strategy

This section of the business plan requires a deep understanding of your market space and how your business positions itself within its niche and competes with existing players .

Within your Sales & Marketing strategy, you should outline:

• A definition of your target market – include its size, existing and emerging trends and your projected market share;
• An assessment of your market – this should summarise how attractive your target market is to your company and why, Porter’s Five Forces or the more recent Six Forces Model are useful tools to define this;
• Threats & Opportunities – you can use a SWOT Analysis to present these;
• Product/Service Features – once you have thoroughly described your product/service, make sure to highlight its Unique Selling Points, as well as any complementary offerings and after-sale services;
• Target Consumers – whether you’re a B2B or B2C company, it’s a good idea to include an ideal customer profile to describe exactly what niche(s) you are going to target;
• Key Competitors – research and analyse any other players inside or outside your market whose offering might compete with you directly or indirectly;
• Positioning – explain in a short paragraph how your company differentiates from your competitors and how it presents itself to your target niche;
• Marketing Plan & Budget – outline the marketing and advertising tactics you will use to promote your business, giving an overview of your brand and of the communication elements that support it;
• Pricing – explain how your pricing strategy fits within the competition and how it relates to your positioning;

A very common mistake that should be avoided is writing that you have no competition. Instead, you should show your efforts in researching your competitors and assessing how they could threaten your business .

4. Operations & Management

This section gives you the opportunity to explain to the reader how your company does things differently .

The people and processes that are allow your business to operate on a daily basis are the key to your competitive advantage . In fact, they help you build a better product, deliver it more efficiently or at a lower costs. Your Operations & Management must be able to successfully realise what you ‘promised’ in the previous sections.

Here, you must demonstrate how much you know about your business, so don’t leave out any relevant detail. Be concise but thorough, focus on two main points:

• Production or Service Delivery;
• Quality Control;
• Credit policies;
• Legal environment;
• Organisational Structure – this is an overview of all the people involved in your business and their position in relation to each other. You should detail the experience of the existing team, as well as the roles that haven’t been filled yet. Include advisors and non-executive directors . Investors and banks will also look at this section to get an idea of salary costs. As these are normally a significant cost centre, don’t overestimate your staff needs.

5. Financial Plan

Your Financial Plan is possibly the most important element of your business plan . This is especially true if the business plan is aimed at investors or lenders.

This section includes projections, budgets and goals that are unique to each business. In particular, you should focus on explaining the assumptions on which you based your forecasts , more than on the forecasts themselves. Every good Financial Plan will include:

• 12-month Profit & Loss Projection – A month-by-month forecast of sales, operating costs, tax and profits for the following year. Sometimes three years.
• Cash Flow Statement & Forecast – This financial statement tracks the amount of cash that leaves or enters the business at any given time.
• Breakeven Analysis – This is a cornerstone of your business plan. Here you should show what level of projected sales allows the business to cover its costs.
• Capital Requirements – This point is fundamental as it shows investors what their money will be spent on. It should contain a summary of all the expenses for big purchases and day-to-day running costs.

The Financial Plan is usually followed by the Appendices. Here you should include detailed spreadsheets and calculations used to prepare the financial statements.

We help Founders write a solid business plan by supporting them with financial planning and forecasting .

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The information available on this page is of a general nature and is not intended to provide specific advice to any individuals or entities. We work hard to ensure this information is accurate at the time of publishing, although there is no guarantee that such information is accurate at the time you read this. We recommend individuals and companies seek professional advice on their circumstances and matters.

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