A solid business plan is one of the most important things an entrepreneur can do to increase their chances of success. You’ve done the research, and you have a firm idea of what your company will do. Now it’s time to write it all down or take a hard look at what you’ve done already. In this blog post, we will review what your business plan should include, how it can help you generate revenue, and why it’s so essential in today’s competitive environment.
Defining a business plan
Before we dig into what goes into it, let’s talk about what a business plan is. In a nutshell, a business plan is a written document that outlines the goals and objectives of your business and how it will achieve them.
At a high level, it should include information such as a company description, vision, and mission, market research, an operations and management plan, financial analysis, sales strategy, and marketing tactics. A well-thought-out plan can help you to create a practical timeline for reaching those goals and establish measurable milestones along the way. But what does it take to craft a powerful and compelling business plan? Let’s briefly look at each element.
Organizing your business plan
Before you sit down and start writing, take the time to think about how you want to structure your plan. The standard elements include:
- An Executive Summary
- Business and Industry Overview
- Market Analysis
- Competitive Analysis
- Sales & Marketing PLan
- Ownership & Management Plan
- Operating Plan
- Financial Plan
Think about formatting and structuring your business plan in a way that makes it easy to navigate and reference. Depending on the complexity of your business, it’s natural for a business plan to be lean or long. Length doesn’t dictate whether a plan is complete.
Pro tip: add a table of contents at the beginning, and include quick links in your digital version.
As they say about first impressions: make it count! This section puts the bottom line up front, and many potential investors and lenders will form their initial opinion on. It has to be on point and it has to stand out.
Even though this section typically serves as an introduction, you should write this last.
Why? This is a distillation of the “so what’s” you document and substantiate later in the plan. Chances are, you’ll get the most powerful pieces by working through the details further in the business plan.
It should excite the reader and tell them what they’re going to learn more about if they read on and you may not 100% know what that is yet.
Pro Tip: if you’ve already written an executive summary, set it aside and start from scratch. Rewrite it anew when you’ve finished the rest of the plan, and then compare it to your original.
This seems pretty straightforward, but let’s talk about the points you should touch on when writing a powerful business description. Start by answering these questions:
- What type of business are you starting and why?
- What’s your mission?
- What sort of problem does your product or service solve?
- Who does your business help?
- What industry does your business fall under and are there trends or major statistics about the future prospects for it?
- What will make your business different from the competition?
Describe what makes you unique in a way that resonates with readers – if the executive summary equates to the book cover, the business description is the teaser on the back.
Every single sentence should pack a punch. Keep it brief, keep it simple, and where you can use data and numbers to back you up.
The market analysis is an incredibly crucial section of the business plan, as it identifies who your best customers or clients are. This section demonstrates you have a solid and thorough understanding of your target audience to make informed decisions. To create a compelling market analysis, thoroughly research the primary target market for your products/services.
This is often the hardest thing to do, and it takes time. But, once you identify your customers’ or clients’ needs, wants, habits and motivations, you’ll be equipped with all of the knowledge necessary to differentiate yourself from your competitors.
The primary goal here is to distinguish your business from the competition. Still, a robust competitive analysis will persuade potential funding sources that your business can compete in the marketplace successfully.
This section of your business plan includes assessing your competition’s strengths and weaknesses, any advantages they may have, and the unique qualities that make your business stand out from the competition. If there are barriers to entry in your market, you should address how you’ll overcome them.
Sales and Marketing Plan
The sales and marketing section starts with your unique selling proposition and then details how you plan to get your products or services to market. Your Sales and Marketing Plan should address the following items:
- Unique Selling Proposition
- How you’ll get your business to market: marketing approach and tactics
- Proposed advertising and promotion activities.
- How you’ll persuade people to buy them: sales approach and tactics
- Pricing Plan
Pro tip: If this section doesn’t realistically answer “why us and not them,” it’s not strong enough.
Ownership and Management Plan
This section outlines your legal structure and management resources. This includes any internal or external team members. Think of this section as a mini resume for your business and have experience or special skills brought by key players.
Pro tip: If you’re using your business plan to obtain funding, it’s important to include an advisory board or program as a management resource.
This section articulates the day-to-day functionality of how you’ll deliver your product or service and typically includes:
- Physical Location and Facilities
- Types of Employees
- Suppliers or Manufacturing Process
Pro tip: Standard Operating Procedures (SOPs) are a fantastic tool to set your team up for success. Growing this section into an SOP for real-world use once you open is a way to save time.
Most people go into business to make money. If you’re using the business plan to get funding, you must demonstrate a solid handle on your current finances, funding needs, and projected income.
You’ll need to include:
- the balance sheet
- the income statement
- the cash flow statement (or if just getting started: cash flow projection)
- financial statements and analysis
- funding requirements
It matters how your plan looks. Make sure to format it cleanly for both print and digital versions. Add a compelling cover. The more established your brand appears, the better, so hire someone to help with a logo and cover design if your budget permits.
Data is king. Add appendices and exhibits to bolster the credibility of what you’ve claimed in your plan. It shows you’ve done your homework and aren’t just sharing an aspirational dream.
Don’t go it alone. Have a mentor or fellow business owner review your plan and poke holes in it. Be open to their critiques; many people will have advice as you open and run your business. You don’t have to take action on all of it, but a different perspective may give you another edge on the competition or tweak your plan to secure that investment.
If you’re struggling with creating your business plan, improving an existing one, or just not getting traction, Sign up to learn more about our Bootcamp series, where we’ll help you create or evolve a business plan that drives results.