A good business plan serves as a guide for building a successful venture which focus on your business idea and how you intend to make it. The plan also helps you to document your market studies, strategy, cost estimates, predict sales and control the operations. It is important for every business owner to understand the content of a good business plan and avoid the common business plan errors.
Setting a goal is not the main thing. It is deciding how you will go about achieving it and staying with that plan. – Tom Landry.
Business plan also helps the management or investors to make decision about a new venture or expansion. It is a must have document if you are relaying on an external sources of finance. It can also be used for application of government grants and supports.
- Executive summary – A brief explanation of the business. It also includes goals and mission statement. Most expert recommends that you write this part last.
- Business Product or services – Overview of products and services of the firm. Remember customers don’t buy product but they buy benefits.
- Industry analysis – Explain the industry size, trend, features etc. Historical and current information can help you to forecast the trend. You may also include the Porter’s five forces analysis.
- Competitive analysis – Who are your current and prospect competitors and how you plan to face the competition? You should consider their strengths and weaknesses and the opportunities and threats for you.
- Market analysis – Who are your target customers? Demography, location, segments and what is the market size? The size influence the demand.
- Management team – You need to show the planned structure and the winning executive team. Add profiles of the founders, partners or key officers. These include their skills, qualifications and accomplishments. If you lacked certain key skill within your team, indicate how you plan to close the gap e.g. learning, hiring or outsourcing.
- Operations – Location is key. Have you acquired the relevant licenses and permits? It also discusses about logistics, equipment, and operational value chain.
- Marketing strategies – how you will sell your product, pricing, strategies to enter the market. Put the customer first and the profit will follow. If you can convince the investors that you have customers, you will not lack capital.
- Financial plan – Financial plan includes the statement of financial position, income statement and cash flow statement. It is important you clearly show the sources and uses of funds. Remember lenders first concern is cash not profit. This section may also include financial assumptions, key financial indicators, business ratios, scenario analysis and possibly long-term financing plan.
- Appendices and supporting documents – any other document that can support your plan e.g. marketing researches, contracts, agreement, pictures, references, awards, resume etc.