A good business plan serves as a guide for building a successful venture, which focuses on your business idea, and strategies of making it happen. The elements of a business plan generally depends on the purpose and users of the plan. For example a plan for internal use may not need a management profile but outsiders e.g investors are very interested in the management team and the lenders want a clear financial analysis. Whoever may be your target user, a winning business plan should contain certain key elements:
Key elements of a winning business Plan
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1. Executive summary
A brief highlights of the business including key goals, mission statement, financial snapshot, financing need, current position etc. Most experts recommended that you write this part last.
2. General Company Description
You need to explain the company’s operational structure; that is wholesale, retail, manufacturing or service. Do not forget about the legal structure (sole proprietorship, partnership or company), and startup plan (if it is a new business idea).
3. Business Product or Services
Describe the products or services your firm is selling. You may also talk about the use of technology and even the future product plan. However, remember to focus on the benefits of the products or services to the customers. If you are producing a complex product, make it simpler for readers who are not technical.
4. Competitive & Industry analysis
Depending on the size and nature of your focus industry, a business plan may include the industry information such as size, trends and growth potentials. Information about current and prospect competitors can also be helpful. You should show how you plan to face the competition.
5. Market analysis
No matter how good your product or service, your business cannot succeed without effective marketing. So, who are your target customers? What are the demography, location and segments? You also need to estimate the market demand size, trends and growth prospects.
6. Marketing strategies
What are your pricing and promotion strategies and other marketing programs? Product pricing is simple, however your value proposition and marketing programs are very critical in entering a new market. It is important to realised that marketing and planning are ongoing processes, not just done when you start the business or need to raise funds from investors.
If you can convince the investors that you have customers, you will never lack capital.
7. Management team
You need to show the planned organizational structure and the winning executive team. Add profiles of the key management team or the founders. This should include their skills, qualifications and accomplishments. If you lacked certain key skills within your team, show how you plan to close the gap e.g. learning, hiring or outsourcing.
8. Business Operations & Logistics
This section describes how you plan to run the business, including general logistics, location, equipment, and operational value chain. Location of your production, distribution and service office is (are) very key. If applicable, also discuss about licenses and permits to operate this business or in the location. Do not ignore the social and environmental issues.
9. Financial plan
Financial plan includes projection of balance sheet, income statement and cash flow statement. If your business is looking for a startup, you should make a list of key startup expenses. Remember lenders’ first concern is cash not profit. You should also clearly show your sources and uses of cash.
Every part of the business plan is important but nothing will come if you have major cash flow issues. This section should also include the key financial assumptions, financial indicators, breakeven analysis, business ratios, scenario analysis and possibly your long-term financing plan.
10. Appendices and supporting documents
Any other document that can support your business plan should be added here e.g. marketing researches, contracts, agreement, pictures, references, awards, resume, press releases etc.
Business plan is an important strategic business document which helps to communicate the management plan to investors and lenders. It is a must-have document if you are relying on an external source of finance. Therefore, it is important you make sure that your business plan covers these key areas.