While the business plan is a fundamental part of starting a business, many new owners neglect to establish one before setting up their company. Since your business plan is the single most important document when looking for investors, you need to get it right. Here are the seven key components your plan needs.
The first and most important part of the business plan is the executive summary. It lets potential investors know whether the project looks viable or not, and should be clear and compelling. This section also outlines the points in the plan and describes how the business will present its offerings to the public. The executive summary should include:
• Mission statement: a brief summary of the business and its objectives.
• Company information: introduces the founders, with their biographies.
• Growth projections: outlines and quantifies the earning potential of the business.
• Products or services: describes what products and services are offered by the business.
• Financial information: outlines current capital for the company, including any current investors.
While the first section describes what is being offered, and how it is going to be offered, potential investors will want to see more detail. The company description provides much of this additional information. This is the section where you highlight the clientele you foresee, the advantages you have over the competition, and the void your business will fill.
The market analysis outlines how your chosen industry functions. For example, if you were selling office supplies, you would explain the supply needs of office workers in your target market. Describe how large your market is, how your prices are structured, and how you will remain competitive in your industry.
Organization and Management
Here you focus on the structure of your business. How many owners does the company have? Who will operate the business? How are responsibilities delegated? What will your promotion and incentive structures be? Many people use charts and graphs to give a visual representation of these factors.
Goods and Services
In this section you give a more detailed description of your offerings. Describe how they differ from your competitors’ products and the benefits they offer your customers.
Your growth strategy is described here. How do you intend to increase your business in the near and distant future? Discuss expansion plans in this section, as well as plans to market to prospective clients. What marketing media will you use? What’s your budget? Do you have an offline plan as well as an online plan?
Here you express the financial goals for your business. Outline how the marketing and sales ultimately equate to a profit. Basically, you make earnings and cost predictions in this section. This is another part of the plan where graphical representation of the information can really help.
Your business plan is the first serious step toward starting a new business. A large majority of businesses fail in the early stages, but you can increase the odds for success if you properly plan your objectives and strategies. Take the time to devise a plan that is right for your business and looks good to investors.