A business plan is a great way to get your vision for your company down on paper. Not only does it help you to lay out how you plan to achieve your goals, but it can help other people, like partners, executives, or even lenders, to understand your business better. Because they are so helpful to bring people and funds on board, a business plan needs to show the credibility of your business idea. It will address your USPs and how you plan to make a profit.
What Are the Essential Elements of a Business Plan?
Business plans tend to follow the same template for most companies because investors and lenders will need certain information. Your business plan needs the following sections:
Executive Summary
An executive summary is a concise snapshot of the whole business plan. Often, people reading your business plan will use the executive summary to decide if they want to continue reading or not. Your executive summary should put your best foot forward and present the things that make your company unique and give you a competitive advantage.
Company Description
Next, your business plan should tell readers a little bit about your company. Include information like your business mission, business entity type, and the company owners and key executives. This section will likely be quite short.
Market Analysis
This is one of the most important sections of a business plan as it not only shows investors that you are serious and have done your research; it also helps them see whether your business is viable or not. Your market analysis should include the following information:
- Identify your niche in the industry (like Fitness industry – nutritionist specialising in helping women overcome eating disorders or Content creator – specialising in creating video content for AI startups)
- Identify your key competitors and what kind of customers they attract
- Identify what sets you apart from competitors and the pros and cons of your business idea
- How is the market growing or changing, what new demands or concerns are there
Management and Staffing
Identify how your business is run. Are you the only one working in your business, or have you got a team? Talk about the experience your team has and how your company is structured. If you plan to bring additional team members on with the finances, mention this.
Services and Products
Briefly explain what it is you sell and list the main product lines or services you offer along with pricing.
Identify the key advantages and disadvantages of your product and how your product stands out from similar products on the market. If you have plans to increase lines, conduct additional research, or make improvements, mention this.
Marketing and Sales Strategies
Where do you currently engage your audience, and how do you advertise your products or services? List your current marketing strategies and spending. Explain how you plan to market in the next year or two.
How do you sell your product? What is the cost of selling your product through each channel? Include any current sales insights you have if you are already trading.
Will you increase sales and marketing budgets and resources as you grow? If so, how and what are your priorities?
Financial Forecast
If you are already trading, include financial information for the last 3-5 years, or as far back as you have it if you have not been in business long. Include balance sheets, profit and loss reports, and a brief overview of costs and sales data. Analyse spend per customer type and spend by origin (where you found customers). This data will help you to adjust your marketing plan accordingly.
Forecast the next 3-5 years for your business and explain the reasoning behind your forecasts. This may include information like long-term accounts and pre-orders. It may also make assumptions based on your audience size.
If you are writing a plan to gain investment, you can also detail what you plan to spend the capital on and what ROI you expect to see from each area of spending.
Appendix (Optional)
If your marketing team or you have conducted thorough market research or have financial reports you want to attach, you can add them to the appendix or appendices. These should be referenced within the main part of the business plan so the reader knows where to look for relevant additional information.