Your business plan is where you write out the different aspects of your business. A good business plan can be just a few pages long, excluding financials and additional information like resumes.
Do you really need a business plan?
If you are a solopreneur, planning on staying small, or maybe you are more ambitious and have secured a location on the busiest street or intersection in your city or town. It might be easy to think you don’t need one because your business is too small, or that your location guarantees you traffic and, therefore, success in business.
You always need a business plan. Your business plan and the financial parts of it are where you define what your business is, how it will run, what you will need, and when you will need it. It is an essential part of starting any business, and planned businesses increase their chances of success.
TIP: If you can’t make your business and finances work on paper, you won’t be able to make it work in real life.
TIP: Do not outsource the writing of your business plan. Nobody will ever know your business as well as you do. You may also be asked to explain parts of your plan to financers, investors, and potential partners. If you need help with your business plan, you can use one of the free SBA resources near you.
Executive Summary
The executive summary is a business plan’s first and most important section. This summary highlights the topics the business plan will address and offers a broad overview of the entire document. If the business plan is for a new company, you also want to explain why you are starting it. To ensure that you fully understand your business plan and can successfully articulate it, it’s frequently better to write the executive summary last.
Company Description
The business description comes next. This section gives a thorough overview of your company’s objectives, aims, services, and target market. Additionally, you want to describe the sector that your business will operate in, as well as any market trends and significant rivals. Finally, explain the experience you and your team have in the field and what makes your firm stand out from the competitors.
Market Analysis
Define your target market precisely so that you can make informed strategic assumptions about how well your good or service will resonate with them. Among the topics to be covered in this section are:
- Who is your target audience?
- Where is your target audience?
- What do your customers want, and what issues do they face?
- How do your products and services help your customers and address their issues?
- Where does your target audience spend the majority of their time, including specific social media channels and physical locations?
Competitive Analysis
A thorough competitive analysis clearly compares your company to your rivals. Describe the limitations and strengths of your competition and how you believe your organization will fare against them. Along with any competitive advantages your rivals may have, describe how you intend to differentiate your business in this section. Finally, include how your company differs from others in the sector, as well as, if relevant, any potential difficulties you might have while entering the market.
Description of management and organization (including advisors and mentors)
The specifics of your company’s management and organizational approach should be covered in this area of your business plan. Describe your company’s leaders, including their backgrounds, roles, and duties. You might also mention your company’s legal structure and the requirements for human resources.
Breakdown of products and services
Use this section to go into more depth about the specifics of the goods and services your business provides that you briefly mentioned in the executive summary. Include pertinent details regarding your goods and services, including:
- What needs will they satisfy?
- How will they be produced?
- How much do they cost to produce?
- How long will they last?
Marketing Plan and Sales Strategy
The specifics of how you intend to market and sell your goods and services should be covered in this section of your business plan. Included in this section should be:
- Your proposed marketing and advertising plans
- Prices for the goods and services provided by your business
- Your plan to reach your target market with your goods and services
- Your techniques for generating sales
- Why your target market should buy from you instead of your rivals
Financial projections and needs
Your business plan’s financial section should include information on how you plan to generate income and the capital you’ll need to launch. A cash flow prediction for at least two years should all be included.
TIP: Anyone looking at your funding plan, investing, or partnerships will most likely look at your financial projects first, and if they seem reasonable, researched, and thought out, they may look at the rest of your plan. More likely, they will ask you to explain it to them.
TIP: When making your financial projections, be realistic. Large numbers do not inspire confidence. They are an immediate red flag unless you have a contract to back them up. Lenders do not expect you to be making tons of money right away. Instead, show a reasonable path to profit.
Exhibits and appendices
Any additional material to support the specifics of your strategy should be included in the last portion of your business plan. Adding exhibits and appendices will help investors comprehend the research that supports your business plan and will attest to its viability. Usual details to provide in this section are:
- Resumes of company management and other stakeholders
- Marketing research
- Required permits and/or certifications
- Proposed or current marketing materials
- Relevant legal documentation
- Pictures of your product
- Financial documents
TIP: Everyone knows your business plan is a work of fiction and prediction. Lenders and investors also know things will not always go how you have described, which is expected. So the main message your business plan needs to convey is: “I have thought this through.”
