A solid business plan is important for long-term success. It helps serve two main purposes:
- It acts as a roadmap for your business
- It is a tool that helps you obtain outside financing
While it may seem overwhelming at first, once you break it down, it’s fairly simple!
After putting your plan in place, you’ll see how such a simple business tool can help take the guesswork out of starting a business or growing one.
What Does a Business Plan Include?
Your business concept is a summation of your company in a few concise and simple sentences.
It should clearly communicate the idea, design or value proposition behind your business so that a customer, investor or potential partner can quickly grasp what you will do and the value it will provide. Keep the concept statement to one paragraph.
Your business concept is a summation of your company in a few concise and simple sentences. It should clearly communicate the idea, design or value proposition behind your business so that a customer, investor or potential partner can quickly grasp what you will do and the value it will provide. Keep the concept statement to one paragraph.
Your business strategy provides the detail on how you will execute the business concept.
It describes your industry, your product or service and the critical factors that will drive your business success. Those factors might include such things as your management team, operational plans or cost advantages.
In essence, it is an executive summary explaining why your business is suited to succeed.
Specific things you should consider while creating the strategy section of your plan include:
- Products or services offered now.
- Products or services to offer in the future.
- The size of the market.
- How the market is changing.
- Industry trends.
In the market analysis section of your plan, you need to explore the ins and outs of your potential customers or markets.
- Who are they?
- Where are they?
- What motivates them to buy the items or services you offer?
- What do they want or need from you?
- How are you going to attract new customers?
- What do you plan to do to keep them coming back?
- And most importantly... how are you profitably going to meet the needs of your target customer?
In order to be complete, your marketplace analysis should also pay attention to your competitors. Questions to ask yourself include:
- How is your business going to succeed in a market that is already being sufficiently served by another business in your industry?
- Is there sufficient demand to bring another business into the market or expand your existing business?
This section of your business plan will look at the financial aspects of your business.
As a new business you will need to include:
- Break-even analysis.
- Financial ratio calculations.
- Internal and external funding requirements.
- Projected revenues and profits over 1, 3 and 5-year terms.
Don’t forget to include plans for assets your business needs and the costs of the marketing plan the business intends to follow.
Existing businesses need to include cash flow statements, balance sheets and pro-forma income statements.
Keep in mind, you should provide information that will assist potential lenders and investors in approving loans or green-lighting investments in your business.
Maintaining Your Business Plan
To get the most benefit from your business plan, it should be a dynamically evolving plan.
You should adjust your plan as necessary with such things as changing markets, new product concepts, evolving technology, need for additional financing and goal achievements.
An old business plan may not reflect reality any longer, so be sure to revisit your business plan periodically. Having an update checklist helps you to do just that.