Business Plan: Key Components

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A business plan is a formal statement of your business goals, plans for reaching those goals, sales and marketing strategy, and the financial background.

Like a roadmap, a business plan helps you to run your company with a clearer vision; giving you a structured way to organize your thoughts and offering you strategies to follow when things get busy. 

Elements of a Business Plan

These are seven major components of a business plan:

  1. Executive Summary

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An executive summary is the summary of your business and readers can quickly learn about your business without having to read it a large amount of material. The summary should tell the reader what you want.

You should include these key elements into this section: business concept, financial features, financial requirement, current business position and major achievements.

The statement should be kept short and businesslike. You should take no more than two pages for this part. Make it easy for the reader to understand your needs and capabilities by reading this part. 

  1. Business and Company Description

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The business description usually begins with a short description of the industry. Describe the nature of the industry you’re in and present the current situation as well as future opportunities in the industry.

As for the company description, include your objectives, goals and purpose of your business. It should also indicate what you do, your business type and structure, and what makes your business different from others. 

  1. Market Analysis

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Before launching your business, it is essential for you to do homework on your business industry, market and competitors. Things you should include are demographics, target market, market need, competition, barriers to entry and regulation.

Analyze the market as well as determining the strengths and weaknesses of your competitors. Come up with strategies that will help you to overcome the competition.

  1. Design & Development Plan

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The purpose of this section is to provide investors with a description about your product or service. Everyone has a product or service that they want to offer to potential clients. So, you would need to show what makes your product or service unique.

You should chart the development of your product or service. You can also create a development budget in this section to ensure your company reaches its goals.

  1. Marketing & Sales

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Despite marketing and sales are two different functions, both of them have to work together.

Marketing is the process of identifying and meeting the needs of consumers to make a profit. Selling involves convincing customers that your products or services provide the benefits that they are seeking for.

Thus, the marketing and sales plan explains what your marketing strategy is, how you will execute it and how you will generate sales. This part should give an insight of the state of the market.

  1. Operations & Management Plan

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The operations and management plan describes how your business operates. In this section, you can cover things that are critical to operations such as labour, materials, facilities, equipment and processes. This way, you’ll answer readers’ questions about operations without overwhelming them.

As for the management team, this is where you acknowledge your team and advisers who contribute to your business and success.

  1. Financial Summary

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Despite this is at the end of your business plan, it doesn’t mean it’s less important than the earlier sections.

This is where you put in the numbers that show the strength of your business. Provide a record of your financial dealings such as expenses budgets and cash flow statement. Also, come up with a sales forecast and income projections. Investors would want to see numbers that shows the potential growth of your business and that there is an exit strategy for your start-up in which they can make a profit from.