Without These Key 8 Elements in Your Business Plan, It Will be a Huge Failure
In the book Business Plan For Beginners, A Step by Step Guide,
the staff of 6business. offer an in-depth understanding
of what’s essential to any business plan, what’s appropriate for your
venture, and what it takes to ensure success. In this edited excerpt, I offered advice on how you can improve your business plan content and
presentation
There are key
elements that appear in virtually all business plans. These include the review
schedule, strategy summary, milestones, responsibilities, metrics (numerical
goals that can be tracked), and basic projections. The projections include
sales, costs, expenses, and cash flow.
These
core elements grow organically as needed by the business for actual business
purpose.
And
for the formal business plan document, to be read by outsiders for business
purposes such as backing a loan application or seeking investment, the
following summarizes those special-case business plans. Here’s what they
normally include:
Executive Summary
Just
like the old adage that you never get a second chance to make a first
impression, the executive summary is your business’s calling card. It needs to
be succinct and hit the key highlights of the plan. Many potential investors
will never make it beyond the executive summary, so it needs to be compelling
and intriguing.
The
executive summary should provide a quick overview of the problem your business
solves, your solution to the problem, the business’s target market, key
financial highlights, and a summary of who does what on the management team.
While
it’s difficult to convey everything you might want to convey in the executive
summary, keeping it short is critical. If you hook your reader, they’ll find
more detail in the body of the plan as they continue reading. You could even
consider using your one-page business plan as your
executive summary.
Company Overview
For
external plans, the company overview is a brief summary of the company’s legal
structure, ownership, history, and location. It’s common to include a mission
statement in the company overview, but that’s certainly not a critical
component of all business plans.
The
company overview is often omitted from internal plans.
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Products and Services
The
products and services chapter of your business plan delves into the core of
what you are trying to achieve. In this section, you will detail the problem
you are solving, how you are solving it, the competitive landscape, and your
business’s competitive edge.
Depending
on the type of company you are starting, this section may also detail the
technologies you are using, intellectual property that you own, and other key
factors about the products that you are building now and plan on building in
the future.
Target Market
As
critical as it is that your company is solving a real-world problem that people
or other businesses have, it’s equally important to detail who you are selling
to. Understanding your target market is key to building marketing campaigns and
sales processes that work. And, beyond marketing, your target market will
define how your company grows.
Marketing and Sales Plan
The
marketing and sales plan details the strategies that you will use to reach your
target market. This portion of your business plan provides an overview of how
you will position your company in the market, how you will price your products
and services, how you will promote your offerings, and any sales processes you
need to have in place.
Milestones and Metrics
Plans
are nothing without solid implementation. The milestones and metrics chapter of
your business plan lays out concrete tasks that you plan to accomplish,
complete with due dates and the names of the people to be held responsible.
This
chapter should also detail the key metrics that you plan to use to track the
growth of your business. This could include the number of sales leads
generated, the number of page views to your web site, or any other critical
metric that helps determine the health of your business.
Management Team
The
management team chapter of a business plan is critical for entrepreneurs
seeking investment, but can be omitted for virtually any other type of plan.
The
management team section should include relevant team bios that explain why your
management personnel are the right people for their jobs. After all, good ideas
are a dime a dozen—it’s a talented entrepreneur who can take those ideas and
turn them into thriving businesses.
Business
plans should help identify not only strengths of a business, but areas that
need improvement and gaps that need to be filled. Identifying gaps in the
management team shows knowledge and foresight, not a lack of ability to build
the business.
Financial Plan
The financial plan is a
critical component of nearly all business plans. Running a successful business
means paying close attention to how much money you are bringing in, and how
much money you are spending. A good financial plan goes a long way to help
determine when to hire new employees or buy a new piece of equipment.
If you
are a startup and/or are seeking funding, a solid financial plan helps you
figure out how much capital your business needs to get started or to grow, so
you know how much money to ask for from the bank or from investors.
A typical financial plan includes:
- Sales Forecast
- Personnel Plan
- Profit & Loss Statement
- Cash Flow Statement
- Balance Sheet
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