Constructing a business plan isn't something that should be taken lightly. While some entrepreneurs may see it as a formality that lacks the luster of grand speeches or flashy images and videos, the business plan is crucial.
Not only does it sell the potential investor, customer and employee on the vision, it specifically outlines how sound and well run the business will be.
Business plans can be long, complicated, and daunting to write, so we highlighted five essential items that must be included in every business plan, no matter the venture.
A key purpose of a business plan is to give readers a total understanding of the company's goals and how they will be achieved. Presenting the concept is the best opportunity to do just that. This part of the business plan is usually broken down into three elements: executive summary, company description and products/services.
The executive summary is a quick introduction describing who runs the business and what it will offer. Follow that with the company description, which is a brief overview that includes the company structure, principal staffers, nature of the business and its short- and long-term goals. Finally, there is a description of products and services the company plans to provide, which demonstrates how the business stands out with its unique offerings
2. Market Analysis
An entrepreneur has to show that he or she has a full understanding of what they are getting into. The market analysis details the target audience demographic, as well as provide a general overview of the industry. Specifics about the competition can also be included. The more in-depth the evaluation of the landscape, the more likely the audience will buy in.
Investors want to know the nitty-gritty of the company’s plan for execution and what it will do to achieve success. For example, if an entrepreneur were pitching a smokeless cook stove, he or she would explain why this cook stove works better- both as a product and a business. Why is it an efficient model? How will it be sustainable? What will the business look like in six months, a year and beyond?
This item allows for a detailed reporting of how the company may operate. It’s smart to project how the company will grow once it receives a certain amount of funding or reach a projected amount of revenue. It may also help to list any advisors or consultants working alongside the founders. This can give credence to an unknown project and also provide full disclosure of any potential conflicts.
Business plans also need to show how the idea is truly a good business, so a financial analysis is critical. This is especially true for startups trying to sell their plan to prospective investors. For entrepreneurs who don't have any prior financial data to show, they can project the budget for the next five years based on anticipated growth. Often the business plan may quote an accountant or other financial professional who can vouch for the numbers and prove that they are not clouded by optimism and ambition.
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