Business Planning Essentials
The Business Plan: From Concept to Reality
You've no doubt heard the expression, "Failing to plan is planning to fail."
Many entrepreneurs write a business plan only when they need to secure start-up financing. However, your plan is far more than a document for banks and investors to read; it's an invaluable roadmap for launching and growing your business.
In order to put your business concept on paper, you need to think through and research the many factors that are needed to make sure your business is a success. With a plan, not only can you spot potential weaknesses, opportunities, and threats, your plan can help you make informed decisions about your venture before you commit yourself legally or financially.
Here, we've summarized the key sections that you'll find in a business plan.
The Seven Key Sections of a Business Plan
- Executive summary. Your executive summary should be 1-2 pages long, and provide an overview of your business concept, key objectives of your business and your plan, ownership structure, management team, your product or service offering, target market(s), competitive advantages, marketing strategy, and a summary of your financial projections. Your executive summary should be written last, after you've written the rest of the plan; each paragraph should be a summary of the more detailed, related section of the plan.
- Business overview.In your overview, include details regarding your business’s history, vision and/or mission, objectives, and your ownership structure.
- Products and services Portfolio.Expand upon your products and services, including features and benefits, competitive advantages, and, if marketing a product, how and where your products will be produced.
- Industry overview.The industry overview is your opportunity to demonstrate the viability of your business by discussing the size and growth of your industry, the key markets within your industry, how your customers will buy your products or services, and which markets you’ll be targeting.
- Marketing strategy.Here you describe your target market segments, your competition, how you'll differentiate your products or services, and your products’ or services’ unique selling proposition (USP).
- Discuss product or service pricing and promotion, including how your promotional programs will appeal to each of your target market segments.
- Provide a plan of traditional and guerrilla marketing tactics, such as tradeshows, press-magnet events, social media marketing (e.g. Facebook, Twitter, etc.), networking, and print, media, or online advertising. Include the cost associated with each tactic.
- Describe how your products or services will be sold (e.g. storefront, online, wholesalers), and your target markets’ buying cycle.
- Operations plan.Provide a profile of your management team, your human resources plan, your business location(s) and facilities, your production plan (if selling a product), and an overview of day-to-day operations.
- Financial plan.Some believe this is the most important part of a plan—so much so, it’s worth dedicating up to 80% of your time to writing this section. You'll need to show three years’ worth of projected financial statements, including income statements, pro-forma balance sheets, and monthly cash flow and annual cash flow statements. Summarize each statement into a few easy-to-understand sentences and put these in a cover page for the statements. Be sure to document all of the assumptions you used in forecasting your revenues and expenses.