Thinking of starting your business? It’s essential for your business to have a business plan. Here’s a look at the key elements of a good business plan.
It is critical for all businesses to have a business plan. A well-written business plan should state the direction your business is going and guide you through each stage of the business. It should detail the key elements of your business such as why your business is necessary, your plans to run and grow your business, its unique selling point and how it differs from the competitors. It should be clear to everyone who reads it your company’s structure and its goals.
Elements of a good business plan
1. Executive Summary
Your business plan should start with an executive summary, but it’s recommended you write this last because the executive summary should highlight the important details in your plan such as the company’s mission statement, the services you provide or products you sell, a summary of objectives and a description of the market, the growth potentials of the business, the leadership team, employees and financial information. A good executive summary should be compelling.
2. Company description
This is another essential element of a good business plan. This should include a detailed description about your company such as the company structure, goals, strengths, etc.
3. Market Analysis
This is critical to business success. Your business plan will need to include a well-thought out and researched market analysis. This will show whoever sees your plan that you have researched the industry and the specific market you are planning to enter. Before you start your business, you need to make sure there is a viable market for what you offer. You will have to provide details about you target market – their needs, their lifestyle, their income levels, their purchasing habits, buying cycles, demographics, behaviors, preferences etc. Also, about the road to market, the size of the market, where the market has been, where its expected to go and how your company intends to fill the gap.
4. Competitive Analysis
In a good business plan, you need to have conducted a proper analysis of your current and potential competition and your direct and indirect competitors and how your company stands. You need to be aware of the marketing strategies of your competitors, and also their strengths and weaknesses and how your company can fill those gaps.
5. Description of Management and Organization
This should include how you intend to structure your organization. A proper introduction should be done of your company managers, their skills and job role. Do include whether your company will operate as a partnership, a sole proprietor or any other type of ownership structure.
6. Product and Services
Here, you should discuss your products or services in details. What you intend to sell or the service you intend to provide and how they will meet an existing need. You also need to detail what makes your product/ service unique and how it differs from the competitors. You can also mention how you will source for raw materials, your vendors, your suppliers. You can include patents, trademarks and copyright issues here as well.
7. Marketing and Sales Strategy
You might have a great product but if your target market don’t know your product exists, it would surely fail. That’s why having a good marketing plan and sales strategy is critical to business success. This should contain the road to the market – how you intend to get your goods and services in front of potential clients. Also include the steps to promote your product and the budget to implement your strategies. The sales strategy section of your business plan should discuss your sales plans and your target sales.
8. Financial Projections
In the final section of your business plan, include your financial goals and expectations that you have set based on the market research you have done. You will need to report your anticipated revenue for the first year and your projected earnings for the subsequent years. Don’t put an inflated figure here. Do a proper market analysis and put in a realistic revenue. Financial projections and estimates will help you, potential business partners, investors or lenders objectively evaluate a company’s potential for success. If a business seeks outside funding from banks or investors, providing comprehensive financial reports and analysis is critical.
Every business needs a good, well-thought out and clear business plan. A business plan will help convince you of the viability of your business idea. If you plan to request a loan from a bank for your business, you will need to bring along your business plan. Without it, it would be difficult to get funding for your business from angel investors, venture capitalists and financial institutions. A business plan might be the difference between success and failure for your business.
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