What is a business plan?
A business plan is a roadmap. A business plan is a cloudy crystal ball. A business plan is essential to the success of your business.
Most people view a business plan as a stuffy document that would only be used to raise capital. Nothing could be farther from the truth. Business plans are incredible tools that allow you to look deep within your organization and for strategic future goal-setting.
What are the main parts of a business plan?
- Executive Summary
- Business and Company Description
- Products and Services
- Market Analysis
- Strategy and Implementation
- Organization and Management Team
- Financial Plan and Projections
See what needs to be included in each section below..
In order to create a thorough and poignant business plan, it is imperative that you be honest with yourself. A great plan will be able to explain who you are, where you are going and how you are going to get there. However, unless you are brutally honest about the facts, no amount of plan building will do you any good if it is all based on inaccuracies and falsehoods. Be brave, face your obstacles and build a business plan that truly reflects your hopes, dreams and realities. Once that foundation is built, you can only go up from there!
• An executive summary is meant to be brief, concise, thorough and when appropriate, exciting. Ideally, the reader will be able to quickly understand who you are, where you are going and how you are going to get there.
• Executive summaries range in length but they are usually no more than 10% of the total document.
• The executive summary should be able to stand alone. You can use it as a starting point and only when someone is truly interested in seeing more do you send them the whole business plan.
• Be visual! Don’t be afraid to use charts, infographics, pictures and more. If you are sending your summary via email you could even add video. Too much text will bore the reader, so the visuals will help bring the document to life.
Business and Company Description
• The business and company description tell us the who, what, when, where, how and why of your organization.
• The main sections are:
– Company Summary (Eloquent Elevator Pitch)
– Company History
– Management Team
– Legal Structure and Ownership
– Location and Facilities
– Mission Statement
• If you are writing a business plan for a startup, you may not have a lot of these details. Instead, paint a picture. Talk about your “aha!” moment and how you see everything coming together. Be descriptive, honest and grounded in this section.
Products & Services
· While this seems like a pretty self-explanatory piece to bring together, it is also an important look into the present and future build-out of your organization. You may not always be pigeonholed into one product offering or category so consider showing thought behind the descriptions here with room for scaleability.
· List any and all trademarks, copyrights or patents that you may own in this section.
· This is also an opportunity to exemplify what sets you apart from your competitors. There may be others offering the same products and services but answering what make you different is an important distinction.
· If this is a completely new concept, explain the value and why there is a need.
· Include a timeline if possible.
· Market analysis might seem like a daunting task but it is fantastic insight into your business. The results from this research has the power to completely support or derail the project.
· If you are building a plan for a new concept or a small business, there may not be a lot of data to mine. Therefore, it is critical to do your own research and cite your findings. Conduct interviews, dig into records and explore the internet. Use and find anything you can to support your vision but make sure to always show your findings.
· Include target market, industry description, competitive and the strengths, weaknesses, opportunities and threats (SWOT) analysis.
Strategy & Implementation
· This section addresses how your product or service is going to solve a problem.
· Here is where you would share your vision statement. A vision statement defines your company’s objectives and serves as an internal guide that influences direction, culture and branding.
· Address your marketing strategies here. These should include networking, direct marketing, advertising, writing, training, websites, landing pages, affiliate programs, trade shows, PR, etc.
· Key Performance Indicators (KPI’s) are useful here as well. It is critical in your business plan to show how you plan on tracking and measuring your performance.
· This section might also include software or subscriptions that you will use to track customers and for accounting purposes.
Organization & Management Team
· Here you are breaking down the organizational structure of the business.
· This should include a hierarchy breakdown that shows who is on the team, their job description and duties as well as expertise and education.
· No one person should ever have the power to derail positive performance or progress. By building a strong and thorough organizational chart you will show that you have given thought to this team and its future success.
· Small companies will focus more of work flow here and how everyone on the team contributes to a larger, planned purpose.
Financial Plan & Projections
· It is hard to predict what the future holds. However, the financial plan and projections will finally bring substance to your entire vision and show the bottom line.
· If you look at all the other components of the business plan as pieces to a puzzle, then the financial projections are the glue that holds the puzzle together.
· There are many templates that you can borrow from to create the right spreadsheets. Keep this in mind: financial projections should be built with the idea that everything is changeable. These will move and change as you grow.
· You will need to include the following three financial statements: income statement, cash flow projections and the balance sheet.
· Include everything, try not to be conservative and aim to be detailed in your breakdowns such as startup fees and business operating expenses.