A business plan is a road map for your business’s success. Once you make the commitment to start your own business, you need to have a plan for how you will run and maintain it.
Without a carefully crafted business plan for your company, you’ll lack the organization and vision necessary to succeed. Also, in order to apply for certain business loans, it’s required that you provide a business plan for the lender’s review and consideration.
Here are six critical elements that every effective business plan should include…
This summary is the place to clearly state the goals of your business and your overall plan on how to get there. It should communicate to the reader exactly what you wish to accomplish. This is the place to include your mission statement, general details about the company (where it was formed, who its founders are, location, size, etc.), and the products and/or services the business has to offer.
In the business description, not only should you describe your individual business, but you should also provide some information pertaining to the industry in which your business serves. Include how the industry is performing at present and where you predict it to go in the future. In regards to the description of your own business, include what type of business it is (ex. wholesale, retail, service), its legal form (ex. corporation, partnership), and the target market to which you are aiming to sell.
Management and Organization
Lay out the makeup of your organizational structure in this section. Give brief profiles of your management team, talk about your board of directors if you have one, and provide information about who does what. How many departments is your business divided into? Who is responsible for which tasks? Answer these questions in this section, and use your organizational chart to create a narrative for the oversight of the business.
Marketing and Sales
This section of your business plan should include both your overall marketing strategy and your overall sales strategy. Write out how the business will grow, distribute product or services, and communicate. Talk about your website: how you came to choose the domain name, your tagline, why it’s designed the way it is, and how you envision the public using and interacting with it. You should also outline your plans for promotions, advertisements, and public relations. Put into words how your business will be marketing to its target market.
The sales portion of this section should detail both your strategy and the tactics you plan for your business’s sales activities. In other words, how you are going to structure your company’s sales force, training, and recruitment, and also how you will identify and prioritize your sales contacts.
In this section of your business plan, you’ll want to write in further detail about the industry your business is in, your target market, and your competition. Include the industry’s size, how it has grown in the past, and how it’s projected to grow in the future, along with notable trends seen in past years.
Identify your target market and key facts about it, such as its size, purchasing history, and its potential for growth and change. Then, describe the market in terms of the competition your business will face. Assess any windows of opportunity or potential barriers to entering the market and what share of the market you see your business being able to gain.
In this part of your business plan, you should write what you think your business is capable of accomplishing financially over the next five years. Include forecasted financial documents (like income statements and budgets) for each of the years. Break down the first year into months, then keep the following years arranged in larger segments, be it quarters or even full years.
No two business plans are going to look exactly the same. The data and insight that will be most useful to your business might not be that which is most useful to another. Follow these guidelines on how to break down your plan into sections and prioritize what goals, data, and general information will be most important to your business in its startup phase and in the next few years to come.