Benjamin Franklin believed that “fortune favors the prepared.” His advice remains especially pertinent for entrepreneurs looking to start new ventures.
An effective business plan is essential to its success, yet how can it be created? In this post we explore some key components. These include: 1. Company Description. 2. Marketing Objectives. 3. Financial Projection. 4. Profit and Loss Statement and 5. Competitive Strategies.
1. Executive Summary
An executive summary of a business plan or project proposal provides a quick snapshot of its main points. Investors and stakeholders often use this summary to decide whether or not to review the full proposal, making its importance paramount.
Executive summaries contain three primary sections, such as company description, market analysis and financial details. You should also outline any milestones that you plan to achieve as this can help entice investors and show their potential success.
Make sure your executive summary stays on topic by leaving out unnecessary details, and have someone review it to ensure clarity and conciseness if needed; professional business writers or editors can offer invaluable assistance for this task.
2. Company Description
A company description provides answers to two fundamental questions about your business – who you are and what do you do. This section explores your company’s goals, products and services as well as current and projected financial health of your enterprise.
Your competitive edge should also be communicated. This may simply involve noting how organic your product is or that a portion of its proceeds goes directly to charity.
Your business should also include details regarding its legal structure and any pertinent day-to-day operations such as its location. An organisational chart detailing roles for key employees as well as any gaps that need filling is helpful, while you might consider including photos or illustrations depicting your business here as well.
3. Market Analysis
Market analyses provide a thorough assessment of your business environment. They should include information such as industry trends, major competitors, the expected share of the market that you expect for yourself, and how your products or services will reach consumers.
Market analysis should include an evaluation of your pricing strategy and how your business plans to compete against its rivals. Be sure to highlight how your product or service stands out as offering something special for consumers.
This section of the plan should outline how your company plans to finance future expansion, whether through current cash flow, additional loans or investor capital. An organizational chart would be beneficial in detailing roles and responsibilities, any personnel gaps to fill and any legal structures of your company that must be taken into consideration.
As entrepreneurs struggle to write their business plans, this section can often be the one they dread most: here is where all the hard numbers emerge – start-up costs, operating expenses budgeting and sales forecasting are calculated before cash flow projections can be estimated.
Here, you must detail your financial assumptions and projections (including their source), with investors scrutinizing your charts, tables, formulas and spreadsheets as if they are the blood pressure reading of your business concept. Likewise, investors will scrutinize these numbers closely when assessing if you need outside financing for starting up your venture and will need an explanation as to why such funding will be necessary – plus how it will be utilized if applicable.
5. Management Team
Successful business plans rely on having an accomplished management team. Your plan should outline each member’s strengths and how they’ll help expand your company. Furthermore, it should include an action plan outlining goals such as marketing objectives and sales targets that you have set forth for yourself and when they should be accomplished.
Failure to plan is planning for failure has been proven time and time again in small business environments. Even entrepreneurs with great ideas can stumble when they fail to plan accordingly.
Be it to impress investors or secure loans, or for internal use only, make sure to tailor the content of your plan to the audience it will reach. Knowing who your audience is will enable you to convey information more efficiently while saving both time and energy in communicating your message effectively.