What is a business plan?
A business plan is a document that describes your business’ objectives, strategies, target market and financial forecast. It’s an action plan and
management tool that is subject to change.
Why write a business plan?
A business plan helps determine if your idea is profitable and sustainable. A plan also identifies potential opportunities and risks and will most likely be needed to secure external financing. At minimum, lenders and investors will ask you questions that your business plan can help answer.
Who should write your plan?
You should take the lead in writing your business plan as well as keeping it up to date. When needed, seek assistance from your team, a skilled writer or professional consultants.
When should you write a plan?
Write your business plan as soon as possible. No matter what stage you’re in (starting, expanding or exiting), it’s never too late to write your
business plan.
Key Sections of a Business Plan
1. Executive Summary
The executive summary is a short section located at the beginning of your plan. It’s best written last to ensure it’s comprehensive.
- Summarize the key elements of the business plan with a focus on action and strategy
- Highlight your financial forecast and state a clear financial request if you are looking for funding
- Highlight the problem you are solving or opportunity you are capitalizing on
- Explain how your business is the profitable solution
- Be clear and persuasive to motivate readers to continue reading the rest of the document
2. Business Introduction & Description
Briefly introduce your business concept in this section. Include your legal structure, ownership, business stage and any progress or accomplishments to date.
- Outline your products/services and market position by giving an industry overview
- State your competitive advantage
- Explain your overall goal through a mission statement
- Explain the position in which you ultimately want your business to be through a vision statement
- Talk about your goals and objectives using SMART terms: Specific – Measurable – Achievable – Realistic – Timely
3. Market Analysis
- Customer Analysis
- Define your customers and divide them into groups based on their shared similarities such as age, income, education, values and needs. You can also develop detailed customer profiles to help you describe your ideal customer(s)
- Company Analysis
- Analyze internal resources and skills within your business and classify them as strengths or weaknesses
- Competitor Analysis
- Identify direct & indirect competitors and analyze them based on traits such as price, location, marketing
- Identify your position compared to other businesses
- Industry Analysis
- Analyze the current and future situation of your industry by looking at external factors which affect your business
- An effective tool to use is PESTEL: Political – Economic – Social – Technological – Environmental – Legal
4. Marketing & Sales Strategies
Outline the activities you will use to promote and sell your offering based on each customer profile. Use the Marketing Mix (also known as the 4P’s of Marketing) to help explain your strategy:
- Products/Services
- Describe your offering in terms of its unique features, the benefits to your target customers and any proprietary or unique aspects.
- Price
- Explain your pricing model and the reasons behind your choices
- Place/Distribution
- Describe your distribution strategy in terms of where customers can buy your offering (point of sale), and explain why it’s best for your marketplace and how it’s advantageous for you
- Promotion
- Explain how you’ll generate awareness of your product/service among potential customers, and which marketing channels you’ll use
5. Human Resources Strategy
- Describe your company organization and ownership structure by including the names and backgrounds of lead members of the management team and their respective responsibilities
- Describe your company’s management style and any important aspects of your HR strategy that would give a competitive advantage
- List service providers you may consult or from whom you will obtain additional services
- Consider providing a simple organizational chart, short job descriptions, detailed resumes of key management, etc.
6. Operations Strategy
- Explain how you will run your business
- Outline processes used to produce your products/services and deliver them to the marketplace
- Describe how you will fulfill your marketing strategy using operations
- Provide a general description of the day-to-day operations, facility requirements, tracking systems and other company policies
7. Financials
Identify all the costs required to reach your business goals, as well as sources of investment capital and/or borrowed money.
- Provide an estimate of the sales and expenses your business will incur. Be sure to include your best, expected and worse case scenarios
- Determine your break-even point, which refers to sales volume (at a given price) required to recover total costs
- Provide a projected balance sheet, which is a snapshot of what you own and what you owe on a specific date
- Include a projected income statement to reveal whether or not your business will make a profit or suffer a loss after a specified period
- Project monthly inflows and outflows of cash to reveal whether your company will have enough money to meet its needs on a monthly basis
8. Exit/Succession Plan
Think about how and when you want to leave the business as part of your exit strategy. Keep the succession plan up to date to reflect changes or decisions as they occur.
Other Considerations
Refine your business plan according to the type of business and the audience you’re writing for. You may need to add the following to your plan:
- Cover Page
- Statement of Confidentiality and Non-Disclosure
- Table of Contents
- Appendices
