A business plan provides the basic strategic framework on which to build up the new venture and ensures that those involved with the business are always in line with the original intention of the founders; thus it is considered quiet important for the success and growth of any new business endeavour.
Furthermore, a good business plan details marketing and sales strategies as well as potential earnings from the venture; these are imperative for any investor to decide whether to invest in the business or not. By providing a model of potential future sales and their revenue, an entrepreneur can show to the investor that he or she is fully aware of the workings of the business and has done ample research into the viability of the new venture in the marketplace.
While every business plan is different depending on the industry and the scale of the business, there are some overlapping elements that should be a part of any such plan. Some of the most essential ones are outlined below.
- Executive Summary: This is the introduction to the business plan and is one of the most crucial aspects of it. Essentially, this is the pitch that any entrepreneur presents to describe the company, outline its objectives, detail the financials, request for funding and present the worth of the company. A well written executive summary should be as succinct as possible with the key details easily accessible and not buried in verbiage. Writing as clearly and concisely as possible, the entrepreneur should present the entire business plan in a nutshell in such a way that the reader or listener maintains an interest to delve further into it. In a way, this is the make-or-break aspect of the business plan and thus, should be paid a lot of attention. The rest of the business plan should be detailed.
- Description:This is where the company description should be placed. Starting with an overview of the industry the new venture is placed in, the description part of the business plan should provide a detailed insight into the sort of business this new venture is. The type of markets this new business aims to serve and its characteristics that differentiate it from its competitors should also be mentioned. The mission statement, vision and specific goals of the company should be outlined here as well.
- Market Analysis: To ensure investors that you are aware of the feasibility of the new venture, a market analysis should be included in the business plan. This should outline with detail (preferably statistically) the market share, the demographics of the target market, as well as an analysis of the competition and their standing in the market.
- Company Analysis:Inherently a SWOT analysis, this section should include the strengths and weakness of the company, along with plans on how to counter those weaknesses. It should identify opportunities for growth within the market as well as threats that could face the new business.
- Methods of Organization and Management: For any venture, old or new, it is crucial that those involved – whether they are employees or potential investors – know what exactly the organisational structure is. The founder(s) should decide if they want a mechanical organization with a vertical approach or if they desire a more organic working environment with a horizontal approach. Ample research must be put into this and the desired organisational and managerial structure should be presented in detail with solid arguments to prove how it is the one most conducive to productivity in the workplace.
- Marketing and Sales: The promotional aspect of the company should be outlined in detail. Here everything from whether the company will engage in hard or soft marketing, PR or paid advertisements should be clearly outlined along with how each of these will contribute to the sales. Furthermore, unique selling points of the company should be discussed and how the company aims to capitalise upon those to enhance sales as opposes to competitors. An action plan should be laid out which takes into account market research and nature of the target consumers.
- Description of Product or Service that the company provides:What does the company sell or provide? How is it different from others and how does it aim to sustain itself in the marketplace? Is there demand for it in the market? How does it cater to customer demand and what is the lifespan of this product or service? All of these points should be thoroughly explained in this section. Additionally for products, a description of the entire manufacturing process should be briefly explained and key points highlighted. Similarly with a service, the key points should be highlighted and the details of services provided clearly explained.
- Funding Request:This section should include the amount of funds required by you to set up or further enhance your business. Clear cut figures should be used along with a description of the allocation of funds. Both worst and best case scenarios should be discussed. It is very important to remain realistic here. Showing a cash flow plan and presenting figures is a good way of working on this section.
- Revenue Projection: Expected financial statements of the company based on market research should be outlined here that show how much would be going into the company and how much would be yielded from it.
A business plan is an integral part of setting up any business and therefore should be taken quite seriously. The better the business plan is written, the higher the chances that investors see the merits of the business and invest in it. Poorly written plans reflect badly on the investor, no matter how experienced.