The A-Z of What a Business Plan Includes
If you have a new business, you probably have quite a bit to do already. After all, you have to get the name of your business registered, obtain a tax ID number, apply for permits and licenses, and the list goes on. All of these are key steps to take to ensure your business is both legal and profitable, but you may not have yet considered building a business plan. It, too, is essential for your company.
Why Build a Business Plan?
A business plan works a bit like a map for your business. It carefully details your business structure and goals and helps you achieve each of those. Business plans work to build out the milestones that will be most important for your company. Maybe most importantly, though, a business plan can help establish that you’re serious about the company. Should you need investors, loans, or others, they will likely want to see your business plan so they can quickly learn more about your company and where you hope to go.
What a Business Plan Includes
Fortunately, creating a business plan is easier than you think. It needs only include a few key sections. Before you begin to build it, though, you’ll want to decide whether you should use a traditional business plan or a startup business plan. Traditional business plans are easily the most common type. They use a fairly standard structure, and they push you to develop details in each section.
There’s more work involved with a traditional business plan at the outset, but it will pay off in the long run because should you need investors, you’ll already have everything they need to see. Startup business plans still use the same basic structure, but they’re more like a summary than a traditional business plan is. They take very little time to create, but should you need to acquire funding at a later date, you may have to revisit this and further develop it.
If you go with a traditional business plan, you’ll want to include these sections.
Almost every traditional business plan starts here, but you may not write this until you’ve finished your business plan. This is a summary of the entire plan. If it were pulled out of your business plan, it could serve as a standalone document. You’ll want to detail each section you’ve included within the summary and ensure you talk a bit about your company and what will make it successful. You’ll also want to pull the highlights from each other sections. That’s why it sometimes makes sense to write this section last. After you’ve created the other information, it’s easier to summarize it in this space.
Here, you’ll talk quite a bit about the structure of your business. You’ll want to discuss not only the legal business structure you’ve chosen (LLC, sole proprietorship, etc.) but also the type of business it is. You’ll need to carefully discuss how your business works (whether you function primarily online, have storefronts, or are a catalog-based company) and how the business was initially formed.
Talk, too, about your current location and any plans you have for eventual location expansion. Detail your management team in this section, and offer background information on any key executives in your company.
In this section, you’ll want to spend some time talking about how your business works. Discuss how it is physically set up, the tasks involved in day-to-day operations, and who is responsible for each of those tasks. This section should paint a visual picture of what happens in your company.
The business plan’s market analysis section is one that investors will immediately want to see. Here you’re painting a picture of what the market looks like for your company as a whole. You’ll carefully detail your target market and their buying habits. Additionally, you’ll need to do a detailed analysis of your competition.
What are your direct competitors’ strengths and weaknesses? How will you get the edge over them? Finally, talk about what the overall economics looks like in this industry and any barriers that may be problematic for your company, like restrictive industry regulations and the like.
Product and Services Overview:
Whether you’re creating and selling products or offering customers a service, you need to identify your entire line in the business plan. Classify what you sell with detailed descriptions, and talk about how each option benefits customers. You’ll also want to detail the product life cycle.
If you have products that are intellectual property, talk about the process of obtaining copyrights and patents. If you’re working through research and development for additional products currently, explain what’s happening right now as well as the way forward.
Your marketing strategy will grow and change, but at the moment, you probably have some idea of how you will attract customers and how that sale will happen. Outline the process and discuss what you plan to do to reach your target audience. You’ll want to go into some detail here about not only how you’ll initially reach them but also what you’ll do to move them through the sales funnel.
You need to carefully include all of the financial information pertaining to your company. Outline what it’s going to cost to start the business and keep it running. Make five-year projections concerning costs and income.
Discuss your ongoing expenses, any additional problems that could create funding issues, as well as how you plan to use your start-up budget. If your company is already in the early days, include income statements, balance sheets, and cash flow statements for as long as you’ve been in business. Graphs and charts here are beneficial.
If you refer to any supporting documents (or you have a need to include them for funding purposes), this is the place to include them. Perhaps you want to include the resumes of your management team, photos of products, licenses, patent paperwork, or any other legal documentation someone evaluating your company might need.
If you go with a startup business plan, you’ll want to include these sections.
Create a statement about why customers might choose your products and services over those of any other company. It should be clear, concise, and focus on the obvious benefits you provide to the industry. You’ll want to start here, as this is what will keep people reading.
Talk about what your business does on a day-to-day basis and what activities you’ll engage in to ensure you’re more powerful than your competition.
Resources and Partnerships: List them here if you’re working with others like subcontractors or suppliers or have something many others don’t have in your industry. They help others see why you are uniquely positioned to do more.
In this space, develop a statement that talks about who you’re marketing to and why they might buy. Remember, your company probably isn’t for everyone, so be careful about identifying those you’re trying to reach.
What will customers see when they interact with your business? Will they be logging onto a website, visiting a store, or picking up the phone? Detail the entire sales funnel as well as the life cycle of a customer in this space.
How will you reach your customers? What will it take to engage with them? Think about the various channels you’ll use to reach out to customers in this space.
Costs and Revenue:
How much revenue do you expect to have? What does it actually cost to start your business? While this section doesn’t have to be as detailed in this space as it might with a traditional business plan, you’ll at least need some basic numbers here.
In the end, everything stated above is an accurate way to build a plan, but without ACTION it leads to the same results. So once the plan is finalized, be sure you are committed to taking action or the effort of building it will be a complete waste of your time.
Which business plan model is suitable for you? You may want to work with a mentor or coach to help you decide how to move forward.