One of the most important things you can have as an entrepreneur is a business plan. Your business plan is the key to your future. It allows you to gain perspective, reflecting on your business, and what makes it tick, so that you can project your actions into the future.
Not only can a business plan be a useful tool for you as you plot your course as an entrepreneur, but it can also help you secure the funding and support you need to make your business work.
No lender will approve you for a loan without first seeing your business loan, and no investor or venture capitalist will give you a second thought if your business plan isn’t up to snuff.
If you want your business to be taken seriously, you need a business plan.
Here are the elements you need to include in order to create a fleshed-out business plan:
#1. Executive Summary
This is the overview of your business plan. It’s a snapshot of what will be covered in your business plan, and should include:
- A quick synopsis of where your company stands right now
- What you plan to do with your company
- Why you will be successful
- What you hope to gain with your business plan, including what sort of financing you hope for
- Basics of your company, including your mission statement, founder information and key roles, and the products or services you offer
Even though your business plan should start with your executive summary, it’s a good idea to write this section last, after you have a feel for your business plan as a whole.
#2. Company Description
Even though your executive summary should touch on the broad strokes of your company, this is the section of your business plan where you really aim to impress. Your company description should be clear on the type of company you are, and the market you aim for.
Make sure you show how your business satisfies a specific need for your target market. You can also use this section to describe the advantages of your company, from the expert personnel you have hired to a special process you might have.
#3. Market Analysis
This section can be great for your own edification, as well as for convincing investors to take a chance on you. Your market analysis allows you to drill down deep, looking at your target market, and also taking a realistic view of the current state of the industry and its potential future. Make sure you identify the characteristics of your industry and your target market in this section.
Not only do you need to figure out what to expect now and in the future, but you also need to consider pricing possibilities, and look at realistic profits margins. You should also include a look at your competition, and your likely market share.
Be honest about your company’s strengths and weaknesses, and include information about how you can compensate. Identify challenges (market-based and regulatory) and set forth a plan for overcoming them.
#4. Management and Organization
Even though you have already provided an overview of your company, you still need to dive a little deeper in your business plan. This section provides you with a blueprint for setting up your company. This is where you set out your organizational structure, and identify key management figures.
This section is also where you share information about the owners of the company, and your relationships to each other, your roles in the company, and any sort of compensation structure you agree on. You also need to talk about equity in your company. If you are established, and have already sold shares of stock, you need to mention what’s outstanding.
You should also make sure that it’s clear that those in management positions are well-qualified, and you should also establish their abilities to contribute to the overall vision of the company.
#5. Products and/or Services
This is where you share the nuts and bolts of what you offer. Whether you offer a product that you can sell, or a service that others are willing to pay for (or perhaps both), you need to make sure that you are clear about what you will provide. You should also make sure to include information about why this product or service is different, useful, or desirable.
Other details, such as whether you will continue with research and development, or whether intellectual property is involved, should also be disclosed in this section.
#6. Marketing Plan
Even if you never look for backers for your business, this section of your business plan should be fleshed out. If you want to be a successful business owner you need to have an idea of how to sell your product or service.
Your marketing plan should include information about how you plan to reach your audience, and talk about realistic costs. You also need to figure out where your market resides, and identify media most likely to reach your target market.
A sales strategy should also be included, along with how you will drum up more sales if necessary. If you plan to run an affiliate program, details of the program and compensation should be included here.
#7. Funding Request and Financial Projections
Even if you never ask for money, the process of putting a business plan to paper is a good idea, and you can leave off this last section. However, if you want investors or lenders to support you, it’s important to include this section. Be clear about what you need in terms of money, and project future needs.
Be specific about how you plan to use any capital you receive, and talk about how you will generate more capital in the future.
You should also look at realistic financial projections, based on your market analysis, that can demonstrate to lenders and investors that you are a solid risk to take.
Don’t forget to include supporting documents, such as financial information for principals, deeds to property your business owns, and other items that support your claims and your analyses.
Once you have your business plan down, you can start following it, and using it to guide you to make the best possible decisions with your money.
Putting together a business plan is something you should take very seriously and invest a lot of time and thought into the process. Many companies fail before they even start because of the lack of clear goals and vision for their company. A business plan will help you identify bottlenecks in your business that you might not be aware of.
What do you feel is the hardest element when creating a business plan?