When first starting out, most businesses need to raise funds from their bank or from some other financial institution in order to get their business off the ground. In order to do this they will be required to submit a business plan. That’s because lenders like to know that business owners have mapped out every stage of the road ahead for their business and have documented exactly how their business is going to succeed. A new company’s business plan is considered to be the nuts and bolts, or the reality, of the vision that the business owner has been projecting, and it will show whether the aims of that business are achievable.
Additionally, even if a business is not in search of funding, it is nevertheless a good idea to still write a full and detailed business plan. Not only will it serve to focus your attention in the right places and open up avenues (while writing it) that you may not have thought of, but it will also allow you to spot weaknesses you might not have thought of and adjust your plans accordingly. With that in mind, this article will present a brief overview of what should go into every good business plan:
(1) A Summary of The Business – This will be a brief summary of the most basic (and most important) details of the business. This summary, sometimes called an Executive Summary, essentially sets out the purpose of the business and a framework of what the business will do and how it will do it. Thus you might summarize your business as wanting to offer ‘the best online experience for buying shoes’ or to become ‘the first company to mass produce electric cars.’ In addition to the business purpose you would also include the business name and the business location.
(2) A Summary of the Company – Next you would outline all of the essential details about the company itself, the legal entity behind the business plan. How long has it been operating, what is it’s legal status (Limited Company, Corporation, Sole Trader etc) and how much money has been invested so far?
(3) A Summary of the Company Structure – This should include details of who is (or will be) in charge of the company as well as all of the main employees ie all of those who are essential to the running of the company.
(4) Analysis of Competitors and the Market that the Business Will Operate In- All business plans should include an analysis of the market they will be operating in and that analysis should show how your business will fill a gap, or even dominate, that target market. You should describe the market in detail and why that market will want to use your service or product. Additionally you should show that you have performed detail analysis on all of your competitors in that market and what you need to do to be better than them.
(5) A Summary of the Service of Product(s) Being Offered – This is where you flesh out the exact details about the service you will be providing or product you will be selling. What is your service? How does it differ from other people’s similar service? How much will you charge? How will you market it?
(6) Sales Strategy – This is where you outline the broad strokes of your sales and marketing plans and show just how well you know your market. Who will you be marketing your product at and how will you win them over? How much will you be spending on marketing and advertising and where will you be advertising your products / services?
(7) Earnings Projections – This is the section that most investors and lenders will most likely head to first. Certainly it is the most exciting section, although it is probably also the section which sees most exaggeration. Make sure you don’t fall into that trap. Here you will outline your projected sales and projected earnings at various points (normally every three or six months) over the next couple of years. Included in those calculations should be questions such as how many staff will you need? How much will you pay yourself and your staff? What will your overheads be?
Esther is a small business journalist and finance blogger. She writes about all areas of business and finance from business loans to credit cards and from mortgages to taxes. She also writes for a payday loans uk blog.