No matter what stage your business is at or what type of business it is, having a coherent, well-written business plan is important to meet your goals by providing potential investors, lenders and partners with what they need to know about your business. Expertly and comprehensively discussing all components within a business plan helps not only business owners and entrepreneurs to better understand their business opportunity, but also plays a big part in convincing investors that the opportunity could be right for them as well.
From your own research, you will find that the definition of a business plan varies significantly, and there are many different components needed to ensure that your plan includes what it should to help reach your goals and fulfil the plan’s intended purpose. Therefore, to provide an insight into what a high-quality business plan should include, we have compiled a list of ten key areas that should make up some of your business plan:
1. Executive Summary
An executive summary should always be the starting point of a business plan, with the aim of summarising what your business will accomplish. It may be useful to think of this as your elevator pitch, so that you can best communicate the size and scope of the market opportunity, your business and profitability model, and how the positioning of your management team make it uniquely qualified to execute the business plan.
You will want to have some compelling content that highlights the key points within your business plan, your experience and your mission statement. A worthwhile piece of advice is to come back to your executive summary once you have some of the more detailed sections written, so that you can effectively summarise your whole plan.
2. Business Description and Structure
You will want to give key information about your business and its goals here, showing that your business stands out within your industry and can succeed.
3. Market Research Analysis and Strategy
It is important to know about the industry and current trends of the market that you intend to enter. You will also want to share how other businesses within your industry are succeeding and failing – and ultimately how your business can do better. Key market research questions include:
- What are the sizes of the target market segments?
- What are the noteworthy trends within the industry?
- Do your services compete within other industries?
You will also want to consider a SWOT analysis of your own business and your competitors’, detailing an honest list of your strengths, weaknesses, opportunities and threats to fully understand how your business can impact the market.
Read our previous article for further information: How To Write A Market Analysis For Your Business Plan
4. Analysis of Customers
The purpose of this section is to make clear who your target customers are and what they need – which is hopefully your product or service!
Examples of customer segments may be teenagers, young couples, pensioners or business owners. What is important is that you know who they are, because the customer segment(s) you choose will have a great impact on the type of business you operate as different segments will require different needs.
Try to keep in mind that you want to really know your target customer, so that you can confidently market to them effectively.
5. Analysis of Competitors
You will find a lot of information about your competitors when conducting market analysis, and you may want to include this section within your market analysis. However, the aim of this section is to get in-depth information about your direct and indirect competitors and draw comparisons between your business and theirs’. You need to show how you can stand out and overcome obstacles they may face.
6. Management Description
Showing how your business will be successful includes demonstrating that there is the internal infrastructure to do so. Investors need to evaluate risk, therefore showcasing your management team’s level of expertise and experience can help to meet your business goals will be beneficial. Key questions to consider include:
- Who are the management personnel and what are their backgrounds?
- Are there any other investors and/or shareholders?
- Who is on the Board of Directors?
- Who are the professional advisors (e.g. your accounting firm)?
- What is your business structure? (e.g. sole ownership, or a form of partnership)
7. Products and/or Services Breakdown
A detailed breakdown of your products and services should provide lots of detail about what your business is offering and how you will meet existing demand. You can walk through your suppliers, information surrounding patents and copyrighting as well as other key information such as cost margins.
8. Marketing and Sales Strategy
How do you plan on marketing your product or service? Here you need to describe your strategy for penetrating your target market. Some areas worth mentioning include:
- Your strategic positioning
- Current and potential marketing partnerships
- Detailed descriptions of product and service offerings
- Consider potential product extensions
- Your desired image and branding strategy
- An overview of pricing strategies and sales targets
9. Financial Projections
You need to break down your financial goals and expectations, based on market research, in this section. This would be elements such as projections of your profit and loss statements, and balance sheet and cash flow statements. This can span from predictions of the first 12 months to the years that follow.
What is highly important to note is that all assumptions and financial projections must be supported by the descriptions and explanations offered in the other sections of the plan.
Much like when you write an essay, an appendix is useful to support the contents of the business plan. You could include your financial projections here, technical drawings or partnership letters.
Important Parts of A Business Plan
Every company is different so business plans can vary greatly, however, there are key components that every good plan needs to have to prove that you are uniquely qualified to exceed as a business.
Within a cbm a business plan, you can expect high-quality content based upon consultant expertise and relevant market research that will enable you to secure funding for your business. Therefore, here are the key components that we include in our business plans:
- Executive Summary
- Mission & Vision
- Company Summary
- Competitor Landscape & Comparison
- Market Summary
- Strategy & Implementation Summary
- Route to Market & Marketing Strategy
- SWOT analysis
- Key assumptions
- Break-even calcs
- Sensitivity Calcs
- Sales forecasts with 3D colour graphs
- Personnel Plan
- Projected Profit & Loss with 3D colour graphs
- Projected cash flow with 3D colour graphs
- Projected balance sheet
- Financial Ratios Summary Table
- Tax & Vat, dividends & drawings included in projections
- Commercial Loan quantification
- Equity Investor Quantification
- Exit Strategy
- Company valuation
- Risk Analysis & mitigation
- Internal Rate of Return calcs
- Phased investment offering with dilution calcs
- Management summary
Unsure about what some of these areas should include and whether you could include such details without some support? Look no further! If you would like help with putting together your plan, get in touch with cbm today! Contact us online using the form on the right or call 01604 420 420.