No matter the business size, industry, or location, planning is necessary for any company. The standard business plan can seem mundane and unexciting, but those that choose to skip this step when starting a business can count on being disorganized, frazzled, and wishing they had made one in the first place.
What is a business plan?
A business plan is a formal document that contains the goals of a business and a timeline stating when they need to be achieved. Business plans also include details like the background of the business, financial projections, and strategies that will be used to achieve the goals.
Think of a business plan as a road map. They both show direction and need to include certain things to be considered valid. When laid out properly, a business plan can be used to create relationships with investors, employees, vendors, and interested partners.
While maps must show rivers, cities, and countries, a business plan has other requirements.
Elements of a business plan
Organization and management
Product or service description
Sales and marketing strategies
The length of your business plan doesn’t matter. As long as it includes those eight items, you should be good to go.
Business plan elements
Let’s take a closer look at what each of these business plan elements mean, and why they are important to the overall plan.
An executive summary is a brief summary of your plan. It gives readers a general idea of the most important parts of the business plan so they know what to expect.
While you want to keep it concise, as most summaries are, there are certain things you will need to include. Provide a brief history of the start of the business, describe the mission you wish to achieve, and briefly state a few goals you need to reach to get there.
It is usually best to write this last so you have time to get to know the business plan, which will help you properly summarize it.
The company description is self-explanatory: you describe your company. It is a good time to ask yourself some who, what, when, where, and why questions.
What does the business do?
Who owns the business?
Who are your expected customers?
Where is the business located?
When are you planning on getting started?
This background shows readers how you view your business and what you will choose to focus on.
Next, you will prove to your readers that you have properly analyzed your market before starting this business venture.
Conducting market research is a necessary step when starting a new business or restructuring an existing one. It gives you an idea of who your audience and competitors are so you can craft a product or service that is superior to others in the same market.
What is currently being offered? Where do you fit in the market? A good way to do this is with G2 Reports, which can show readers where you stand against your competitors based on un-biased, third party reviews.
Organization and management
This section of the business plan will show readers how you plan to organize business leadership, and who those leaders actually are.
Image courtesy of Upraise
Tip: The first step in showing others your wonderful team is having a team worth showing off. Check out our resource on hiring and recruitment strategies to pick the best team possible.
Not only does nobody want to invest in or work for a company that has poor management and organization, but you need it to be successful in the first place. Highlight the qualifications of each team member and mention how they will contribute to the success of a business.
Show them what your team is made of and give them a reason to get involved.
Product or service description
The product or service description is where take a closer look at what it is you are selling. This is your opportunity to get people on board with your business. If they don’t like what is being offered themselves, they won’t have a reason to get involved.
Thoroughly describe what you are offering, the associated benefits, and why your product or service is, for lack of a better word, better than that of your competitors.
While you are probably convinced that your product or service is the best in the market, those reading your business plan will want proof. Data. Numbers. They don’t need to be exact, but providing some estimates will only help you prove your case further.
Marketing and sales strategies
After you give a thorough description of the product or service, which is the heart and soul of the business, it’s time to talk about sales and marketing. Think of sales and marketing as the voice of reason for your business. It explains why people should become involved with your business, in one way or another.
This section includes the nitty-gritty details of your business’ function. And the only way for a business to function is to make money. How do you plan on making a profit? Talk about how much your product or service costs to produce, and then how much you plan on selling it for. This is also known as your gross profit, which proves that your company is capable of making money.
It is also helpful to show readers that your business uses a software management tool, like G2 Track, to stay organized and avoid wasted Saas spending.
In the competitive world that is the American economy, you not only need a product or service that stands out, but you also need some solid marketing to prove that to your audiences.
Include your marketing plan in this section. Describe your marketing strategies, tactics that will be used to carry them out, and what company goals you will achieve with marketing.
Now that you’ve shown readers the hypothetical money, it is time for you to ask for the real deal: funding.
Outline how much money you need to make your business a reality. Be realistic and honest. Don’t be afraid to throw out a big number if that is what it will take to get your business off the ground. Think of certain situations that will help or hinder your business and create a range of funding requirements based on their aftermaths.
Wrap up your plan with some financial projections. Put simply, financial projections are predictions of revenue and expenses.
You will want to include financial projections for both short, mid, and long term time periods. Break it down by month, quarter, and year.
Here are a couple of basics you should include to make sure your financial projections are thorough enough:
Revenue: How much will you earn from your products or services?
Expenses: How much will it cost to produce and maintain your business?
Income: This is your revenue minus your expenses.
Income taxes: How much will you be taxed? This will depend on your business structure.
Keeping your finances organized will help if you are looking to gain investors or receive a loan.
Whether you are just starting a small business or reworking your company, any new venture requires a strong business plan. Not only do they help keep you organized as the owner, but they give others a behind-the-scenes look at what the business is and why it matters, opening the doors for growth.
Mary Clare Novak is a Content Marketing Specialist at G2 in Chicago, where she is currently exploring topics related to sales and customer relationship management. In her free time, you can find her doing a crossword puzzle, listening to cover bands, or eating fish tacos. (she/her/hers)