A business plan is a written document that describes a service or product and its management team, the target markets and customers, pricing, competition, and financial performance. With a well-prepared plan, you can successfully raise money from people, in the form of seed capital or venture funding. This article lists the seven elements every business plan should have.
The executive summary is the first part of your business plan and typically the most critical part. It should provide a succinct description of your business, the problem that it solves, your target market, and financial highlights.
Think about it as a way to quickly summarize all of the details in your entire proposal into one page so that people can easily read through it. This means you need to list out all the key components of your plan in a paragraph or two, which should typically include:
- The nature of the product or service being offered
- How this product or service solves a problem for customers (or has the potential to do so)
- Your target customer base
Company and Ownership
- Describe the company and what it does. A business plan should identify what type of industry your business is in and an overview of the products and services it provides.
- Describe the owners and their qualifications. This section should include information about the owners' past work experience, educational backgrounds, certifications, licenses, etc., and any key skills they bring to the table. It's important to highlight any particular strengths that make this company unique from its competitors.
- Describe Company Strengths/Weaknesses/Opportunities/Threats (SWOT analysis). In this section, you need to tell a story about how your firm will grow over time by identifying where your strengths lie and areas that need improvement. Highlight any industry-specific problems currently not being addressed efficiently enough so they can become more significant points of differentiation against the competition.
Product or Service
The next step is to describe the product or service you're selling. Include details about how it works, who uses it, what makes it unique compared to other similar offerings, and why customers will choose it over competitors. If you're creating a physical product, go into more detail about its features and benefits—for example, if you make a new kind of frying pan that requires less oil than existing models because of some special coating on the metal surface—but also explain how much healthier it is and how much money people can save by using your pan rather than one they already have. You'll also want to consider intellectual property protection (such as patents or copyrights) that may apply if others are making similar products.
A market analysis describes your target audience and the current size, growth trends, and other factors that will impact your business. You should describe your target market, including demographics and buying habits. Describe any potential competition in detail and how your business will be different from them. Finally, mention any barriers to entering the market—these may include regulatory compliance requirements or expected costs related to entering into contracts with vendors or customers.
A marketing plan is a document that outlines your strategy for reaching customers, increasing sales, and growing your business. It should outline your goals for the next year (and beyond) and how you will achieve them.
It is one of the most critical parts of any business plan because it lays out a specific set of actions you will take to meet these objectives. This step-by-step guide can help you stay focused on what needs to be done over the course of months or years rather than getting lost in day-to-day operations or distracted by other priorities that arise along the way.
Here's what it includes:
- A mission statement that defines your company's purpose and values
- An overview of market conditions relevant to this industry (i.e., economic trends, competition)
- Strategies for reaching customers through both traditional channels like advertising as well as digital ones like content marketing & social media. You should also include pay-per-click campaigns and email marketing in the mix.
The best way to define your mission statement is by asking yourself "why" questions—why do I exist? What makes my brand unique? Why should someone choose me over another solution? The answers should point back toward your original goal: serving customers better and eventually making money!
The operations plan describes the actual process of running your business. It includes more details about where you will be located and how you will produce the product or provide the service. This is also where you should describe what technology, equipment, tools and machinery you need to purchase to make this happen. The operations plan is also where you can detail how much money it would take for inventory, including raw materials and finished goods necessary to produce or deliver your product or service. You must account for all expenses related to operating your business so that by the end of this section, there is no doubt about how much revenue will be needed for everything else in your financial forecasts section of your business plan.
A financial plan describes how you'll turn the concept into reality. In this section, you'll set goals for your company around revenue and expenses. You will present a detailed listing of how much money you expect to bring in over a given period (say, one year) and where that money will come from. Your cash flow forecast should include details like how much you expect to spend on operations each month and where that money will come from—and whether or not it will exceed income during any given month.
It's also worth mentioning that every projected expense needs to be broken down into its components: labor costs, overhead costs (like rent), equipment purchases/rentals/repair costs, etc. The goal here is to make sure that whatever profit margin you're projecting actually covers all these necessary expenses (and then some).
A well-written business plan includes these sections.
A well-written business plan includes these sections:
- Executive summary
- Company and ownership
- Product/service description
- Market analysis/industry information
- Marketing/sales plan, including distribution channels and pricing strategy
- Operations plan