A business plan is your roadmap to profitability and success. A well-conceived plan describes the vision you have for the business and the path you will take to achieve that vision. It also serves as a communication vehicle for employees, clients, and potential financial resources. An effective business plan has nine key elements.
1. Executive Summary. The executive summary describes the key sections of the plan, such as the company’s mission and goals, target markets, products and services, top competitors, marketing strategy, and finances. The summary should be a page or two and convince the reader to review the entire business plan.
2. Company’s description. The business description provides a clear idea of what your business is about, what it does, and how it will function. In other words, articulate your company mission status, which is a short, formal statement that describes the specific purpose of your business.
3. Market niche. This section of the plan describes your target customers, the broader environment in which your business will operate, and why this environment is viable. The key is to identify your desired niche and explain why you can be successful. To do this, you must answer three questions:
Who do I serve (who are my clients, who are the people I want to have as clients)?
What value do I offer (what can my clients do for me = value proposition)?
How do I help clients achieve this value (what goods and services do I provide)?
Four. Competence. This section of the plan describes your main business competencies, including your strengths and weaknesses. The most important factor is identifying your competitive advantages. You can develop this section effectively by answering the following questions:
Who is my main competition?
How is what I offer different from these competitors (think about their value proposition)?
What are my competitive advantages and disadvantages?
5. Marketing strategy. The most important step you can take as an entrepreneur is to effectively market your goods and services. You may have the best products in the world, but if no one knows about them, your business will fail. Creating a successful marketing strategy is about addressing the 5 Ps:
Product – What are you selling?
Price – How much will you charge?
Person – What is your target market (ie niche)?
Location: How will your goods and services be distributed?
Promotion – How will you inform potential customers about your products and services?
6. Operations. The operations section describes how the work will be done. This is not a particularly detailed section of your business plan, but it should describe the typical business activities of your company.
7. Management and organization. This section identifies key business managers and organizational structure. This is a very important section when you have staff. It is also essential when looking for capital. Investors will thoroughly examine the background of the management team in charge of their business.
8. Long term development. This section of the plan describes how your business will grow over time. You must provide a specific timeline for the development of the business, including identifying the potential risks facing your business. You can start this process by answering the following questions:
Where do you want your business to be in 1 year in terms of product, person and square?
Where do you want your business to be in 3 years in terms of product, person and square?
9. Finance. The last section of the business plan describes your financial projections for the early years of the business. Ideally, this includes the production of multiple forms, including a Statement of income (describes anticipated earnings over a specific period of time), a cash flow analysis (estimates the movement of cash into and out of the business), and a break-even point of analysis (estimates the point at which the income received is equal to the cost of generating that income).