Failing to plan is essentially planning to fail… at least that was the way Benjamin Franklin put it.
Every business, whether it is a startup or it is already profitable, should have a business plan in place. Your business plan is an essential component to applying for a business loan, enrolling in an IDA program or seeking investors. More importantly, it should serve as a roadmap to success. It should be a document you refer to often. In order to make it useful, you got to go all in.
Here are the critical elements of the active business plan:
- Executive summary
An executive summary is a one-to-two page summary of the plan. Most people write this section last. Be sure not to write it as an outline, a list, or as a table of contents to the business plan. It should avoid restating parts of the business plan, but it should summarize what was written in a fresh language.
- Business description
In your business description, you’ll need to include your business model. This is where you will define how you plan to earn revenue. Aside from that, you will need the following information:
- Your company name – The official name of your business as registered.
- Type of business structure – Do you own a sole proprietorship, LLC, partnership or corporation?
- Owners and managers – Who are the key people and what are their positions within your company?
- Location – Where is your business located?
- Company history – What year did you start your business? What is your unique story? What problem does your company solve?
- Mission Statement – What is the purpose of your company?
- Products and services
What products or services are you offering to your prospective clients? You will also describe your unique selling proposition. Please also include:
- A description of each product or service.
- Compare them to similar products or services already in the market.
- Include your prices.
- Describe how orders will be fulfilled.
- Share future products or services offerings.
- Sales and Marketing
In your marketing plan, you share the state of the market, general costs, and how customers are found. You will also share your advertising budget, your target market,
and your pricing strategy.
Key questions to answer:
- What is your budget for advertising?
- How will you measure the success of your marketing efforts? What are your goals?
- Can you set up public relations activities to help market your business?
This section will provide details of the administrative side of your business. It should include how you operate, vital processes, overhead, and other expenses. It should also include legal relationships, your network of suppliers and credit policies. Also, share how you ensure quality control.
Pro Tip: The best graphic to include in this plan is the lifecycle of the customer.
- Design and Development Section
Innovation is required to stay relevant in your industry. This section is where you think for the future, and you are encouraged to think big. Development is a necessary part of the business to remain competitive, so be sure to spend a significant amount of time when writing this part of your plan. Where do you want to be in six months, one year, and three years regarding your product and service? How will you grow?
- Financial Summary
Don’t let the financial summary overwhelm you. Break it down into sections. Start with your narrative. It should include the amount of investment you have already made, the profits you have already made, and the type and amount of funding you are seeking. Next, add your expense budget. Share both your fixed and variable costs. The next page should be your break-even analysis. Investors want to know how you will break even. The final document should be your 12-month sale projections.