First off, a business plan is a statement of goals that a business wants to achieve, how they plan on achieving those goals, and information about the business along with this ranking and the team attempting to reach those goals. You use a business plan to apply for loans and let all employees know what the company’s goals are and how they will achieve those goals.
There are seven typical components that make up a business plan. They are:
- Executive Summary
An executive summary is an introduction to you, what your business is and what products or services you offer. It is used to show that your business is worth the time and money that will be put into it.
- Company Summary
The company summary is an overview of what your company does. It contains what your business wants to achieve, where your business is located, whether or not it is incorporated, who owns the business, and explains the growth of your business so far.
- Products and Services
The products and services section is used to explain what products and/or services your company offers and who your demographic is. It explains what the product is and how much it costs.
- Market Analysis Summary
This is used to explain the business you are in. It describes the market, customer needs, where customers are located, and how you will reach them and deliver your goods to them. This also explains how you stack up against your competitors and why you think there is room for your company in that particular market.
- Strategy and Implementation Summary
This section is used to explain who your target market is and why you are the best at selling your particular product to them. It explains how you will develop and keep a loyal customer base.
- Management Summary
The management summary is like a short resume for any member of management. It contains the experience of each member of management and what their role in the company is.
- Financial Plan
This section contains information about projected Profit and Loss as well as tables with detailed information about cash flow, your sales forecast, business ratios, and break-even analysis.
Your executive summary will be the first thing that any potential investors, lenders, or partners will read. If it is poorly written and does not contain any vital information, chances are whoever is reading it will just throw it away. The executive summary is the most important part of your business plan. You need to make sure that you include the problem you are trying to solve, your solution, your target market, the competition, your team, your financial summary, and the milestones your company has already completed.
The company summary is used to describe who owns the company, where it is located, the goals of the company, what facilities you already have, and the history of the company. This section does not have to be very long but must include all the appropriate information regarding an overview of your company.
The products and services section of your business plan is where you get to show off what your company offers. It includes a detailed description of the product(s) and/or services and how much they cost. Describe who will buy from you and why it is beneficial to them. Explain your competition and why consumers buy/will buy from you. You will also need to explain where you are manufacturing your product(s) and how much it costs or how much it costs to fulfill service obligations. This section will also include what technology your company will be using and how it will affect your company and your target market.
The market analysis summary is essential to understanding your customers and your competition. This section includes information regarding your customer demographic, market trends, competition, and distribution patterns. This will explain who your customer is as well as your competition. Describe your competition’s weaknesses as well as their strengths. Why will customers buy from you instead of them? What makes you stand out from the crowd?
The strategy and implementation summary will be valuable when your company is marketing itself. Use this section to describe your strategy to succeed, your competitive edge, competitors, marketing strategy and program, sales strategy, and forecast, and milestones. Explain how you will make and keep loyal customers. This section can include tables and charts explaining the market you are in along with your sales forecast.
The management summary is used to describe all the members of management. This section should include each member’s name, their background, and their function in the company. It will also include the company’s management philosophy and a table that explains the estimated personnel costs. Explain your organization’s structure which should include a chart with job descriptions and authority clearly lined out.
The last section of your business plan is the financial plan. This includes important assumptions, key financial indicators, a break-even analysis, projected profit and loss, projected cash flow, a projected balance sheet, business ratios, and a long-term plan. This section is used to show how much money will be made, lost, and spent as well as where all the money will be going and coming from. This section can contain charts and tables to assist with understanding each section of the financial plan.
So in summary, what is a business plan? It is a document that contains all the vital information pertaining to the success of the company. It serves as a guide to what the company hopes to accomplish and shows all members how they can achieve those goals. A business plan is what helps a company become the best it can be.
