9 successful business plan elements
Business plans are your road map for profitability and success. The plan prepared properly describes the vision you have for the business and path that you will take to achieve that vision. It also functions as a communication vehicle for employees, customers and potential financial resources. Effective business plan has nine key elements.
1. Executive summary. The Executive Summary describes the main parts of the plan such as mission and company goals, target markets, products and services, main competitors, marketing and financial strategies. Summary must be a length of one to two pages and must convince the reader to review the entire business plan.
2. Company description. The company’s description provides a clear idea of what your company is, what functions, and how it will operate. In other words, it articulates your company’s mission statement, which is a short formal declaration that describes the special purpose for your business.
3. Niche market. Part of this plan explains your target customers, a larger environment where your business will operate and why this environment is feasible. The key is to identify the niche you want and to explain why you can succeed. To do this, you must answer three questions:
Who I serve (who is my customer, who are the people I want to have as customers)?
What value do I offer (what can my customers do because I = value proposition)?
How do I help customers achieve this value (what items and services do I provide)?
4. Competition. Part of this plan explains the competition of your main business, including their strengths and weaknesses. The most important factor is the identification of your competitive advantage. You can effectively develop this section by addressing the following questions:
Who is my main competition?
How do I give different from this competitor (think of your value proposition)?
What are my competitive advantages and shortcomings?
5. Marketing Strategy. One of the most important steps you can take as entrepreneurs is effectively marketing your goods and services. You can have the best products in the world, but if no one knows about them, your business will fail. Creating a successful marketing strategy is about overcoming 5 P:
Products – What are you selling?
Price – How much will you set?
People – what target your market (i.e., market niche)?
Place – How are your goods and services distributed?
Promotion – How do you let potential customers know about your goods and services?
6. Operation. The operating section explains how work will be done. This is not a very detailed part of your business plan, but must explain your company’s typical business activities.
7. Management and organization. This section identifies the main business managers and organizational structures. This is a very important part when you have staff. It’s also important when you are looking for capital. Investors will check the background of the management team responsible for your business.
8. Long-term development. Part of this plan explains how your business will grow over time. You must provide a specific schedule for the development of the company, including identification of the potential risk of your business face. You can start this process by handling the following questions:
Where do you want your business to be 1 year from now on terms of products, people and places?
Where do you want your business to be 3 years from now on product, people and places?
9. Finance. The last part of the business plan describes your financial projection for the first few years of business. Ideally, this includes the production of several forms including profit or loss (explaining anticipated profits for a certain period), analysis of cash flows (estimating the movement of cash in and out