Did you know that 50% of new businesses die within five years?
One factor that led to their closure? They failed to set up a solid business plan.
Building a business can be quite a journey. You may find yourself asking for directions, or even circle back and start over while you’re in the process.
But with a business plan, you have a blueprint that helps you make informed decisions.
First things first: What is a Business Plan?
Business plans are written documents that define the company’s overview and future goals.
You’ll find that there are many business plan templates to help you get started. But it’s always a good idea to understand what the different sections of a business plan are and what you should include in them.
6 Vital Sections in a Business Plan
You’ll find the executive summary in the first part of your business plan. It outlines the key points of your document, including the following:
- Mission statement
- Business overview
- Products and services
- Marketing plan and market analysis
- Financial planning and funding requests
Your company description explains why your business stands out from the rest.
Like your executive summary, you’ll need to keep this section concise. There’s no need to detail your entire company history – as most investors are only interested in the following:
- Business information: What gaps in the market pushed you to launch your business?
- Products or services: What makes them different from what’s already in the market? How can they benefit your customers? How long can it be sustainable in the market?
- Target audience: Who will buy your products or need your services?
- Legal structure: Is it LLC, partnership, sole proprietorship, or corporation?
- Location: Do you plan to outsource the business to different locations? Where are you headquartered?
- Business methods: Internet, storefront operation, mail order, etc.
Organisation and Management
Here is where you explain your business setup and detail the members in your team. Both go hand in hand, but it’s best to separate them into two segments:
- Business Organisation – Who are the people involved in your business? What are their daily duties? What is your business’s legal structure? Are there third parties?
- Management Team – Who does what? Why are they on board? This introduces the owners, managers, board of directors, and support professionals.
Your business strategy acts as a roadmap that outlines how you plan to price, promote, and sell your product.
Most business plans detail their process using the 4Ps marketing concept.
- Product: Related products or services, branding, packaging, quality, warranty, and functionality
- Promotion: Advertising, marketing budget, salesforce, sales promotion and promotional strategy, and publicity
- Price: Pricing strategy, pricing flexibility, retail, wholesale, and seasonal pricing, and bundling
- Place: Distribution centers and channels, transportation, inventory management, logistics, warehousing, and order processing
A market analysis is a detailed overview of your market as a whole—including statistics to support your claims. It also contains an estimation of future business development plans and strategies to achieve them.
In general, a market analysis section describes the following:
- Industry description: Includes detailed statistics of the industry’s size, growth rate, trends, and outlook.
- Target market: Includes the demographics of your target audience such as age, gender, income level, and lifestyle preferences.
- Market test results: This contains the testing process, supporting statistics, and results of the market research conducted as part of your initial investigation.
- Lead time (if applicable): This is the amount of time it takes to handle individual orders and large volume purchases.
- SWOT analysis: Who are your competitors? What are your strengths and weaknesses? What are your opportunities and threats in the market?
Entrepreneurs build a financial plan to determine the economic potential for their venture. This covers the financial forecasts and financial projections of their business.
Components of a successful financial plan include:
- Income statement: This highlights whether your business is profitable over a particular period or not.
- Cash flow forecast: It shows how cash is expected to flow in and out of your business—indicating the cash revenues and cash disbursements.
- Balance sheet: Reports your business’s net worth at a particular time. It summarises the financial data of your business’s assets, liabilities, and equity.
Funding options like startup loans will help you get started with your business strategies. You can include this in an appendix to provide additional financial information.
Plan your business right
It may sound tedious and time-consuming, but business plans are critical to success. They help you establish strategic partnerships and more business efficiency.
And since businesses are getting online today, it’s best to incorporate a digital strategy in your business plan as well.
Want to get a head start? You can include your website details—including your domain, hosting package (to determine how much traffic your website can handle), and the online marketing solutions you’ll be leveraging to promote your business.