Starting a business involves some risks, so it’s important to do all you can to help improve your chances of success from the beginning. A business plan helps you start off on the right track by providing a guide as to where you see your business in the next few years.
A few reasons you need a business plan:
- Investors and banks will want a comprehensive plan for your startup before deciding to give you funding.
- A business plan can give you clarity about your goals and a deeper understanding of your market.
- A business plan helps keep your day-to-day activities on target and organized.
- A business plan can help you make financial and management decisions.
- As your business grows, a business plan provides benchmarks against which to measure your progress.
In the same way each business is unique, so is each business plan. Yours should reflect not only the numbers, but also your startup’s culture, vision and personality. There are also business plans for different purposes—for example, a business plan used as part of a loan application may require more in-depth data than one prepared for the owner’s guidance.
Here are the must-have components of every business plan:
The Executive Summary (Company Description). This is where people start to read your plan, and your first chance to make a good impression. You need to concisely describe what your company does in the first paragraph of your Executive Summary. Be succinct, descriptive and appealing and explain the goals of your business. Why are you uniquely qualified to succeed? Is it your intellectual property, management team’s unique and/or extensive background, early (standout) accomplishments, key partnerships, favorable market trends, etc.?
Market Analysis. Here you need detailed target market statistics and research. Then explain your market research to readers, including your business’s unique selling proposition and what makes it appealing to customers. Are there new markets you’ll explore in the future, new product lines you’ll add or new services you’ll offer? Show the reader that you know your market and understand where your best prospects lie. You should also include information about each of your sales strategies, such as digital, print, direct sales, etc.
Financial Projections. This section outlines what your business will accomplish financially over the next three to five years. Potential investors, creditors and business partners will want this information so they know they're making a good investment with your business. If you are creating the plan to get immediate funding, you need to include a formal funding request and specify how much capital you need now and in the future. Go over this section with your accountant to make sure everything is worded correctly.
Your Team. The organization and management section of the plan tells your readers about the structure of your business and who in the company is responsible for what. Make sure your business plan explains how each member of your staff adds to the success potential of your business. Also project what future positions you see as important to grow your business in the coming years.
Service or Product Line. Thoroughly describe your product or service, including any associated patent/trademark information or research and development activities.
Businesses change to reflect the current economy and fluctuating market trends. Your business needs to be flexible to accommodate whatever the economy will support. As it grows, revisit and revise your business plan. For example, once you have a track record of real financials, you can revise your financial projections to more accurately reflect where you are and where you want to go. If you find you need to hire sooner than you expected, update your plan’s team section and budget to reflect the changes. Create new projections and new goals, and watch your business flourish.