I have come to the conclusion that if I spent as much time writing my business plan as I do worrying about it or researching about it, I would have finished it weeks ago. I’m pretty sure I’m making a mountain out of a molehill. So, to assist you (and me) I decided to summarize the basic requirements of a business plan. It’s a long post so get your reading glasses along with a glass of your favorite beverage and dig in!
Most business plans are organized into five major categories:
- Executive Summary
- Company Description
- Products & Services
- Marketing & Sales Plan
- Financial Information
Let’s discuss each category individually.
The first category is the Executive Summary. This may be the most important part of your business plan. Most experts agree, however, that this should be done last after you have completed all the other categories in your business plan. The executive summary is your chance to shine and show people that you are ready to get your business off the ground. As a summary section you will give a quick picture of your experience, training, and plans for success.
The second category is the Company Description. This is where you give a profile of your company by explaining your business and what niche you are serving. State where you are located and under what type of legal format your company operates, such a sole proprietorship, Incorporated, or LLC. You should then list details such as:
- Management structure
- Number of employees
- Your target market and unique selling position
- Expertise level
- Scope of work
- Hours of operation
Next, list the duties and responsibilities of management/key staff/consultants, if any. Describe what your company does and what makes it unique. Describe your ideal target customer including:
- Age, marital status, income, number of children, educational level
- State whether or not their numbers are growing or declining
- Trends affecting your customer demographic
- What they spend on products or services similar to yours
- Who they purchase these products or services from
- Where and how do they buy them
Profile your main competition:
- Who are they
- Where they located
- What’s their size
- Discuss what market segments they serve
- Give a rough estimate of their sales
- Approximately how long have they been in business
- Sketch out their strengths and weaknesses
- State whether they are growing or declining
- What is their market share
- Where will you fit in
- How will you overcome any competitive disadvantages
The next category is Product & Services. In this section describe your products and services. Discuss how your products and services are unique and better than your competitors. Explain how you see your products and services changing over time and your business growing. Detail the level of customer demand for your products and services now and project where demand will be over the next 2 to 5 years.
Category four is Marketing & Sales. The main purpose of this section is to discuss how you will reach customers. We will expand on who is the ideal target customer we discussed in Category two by answering questions such as:
- Who are my customers and potential customers?
- What kind of people are they?
- Where do they live?
- Can and will they buy?
- Am I offering the kinds of goods or services they want at the best price, at the best time, in the right amounts?
- Are my prices consistent with what buyers see as the product’s value?
- How does my business compare with my competitors?
A successful marketing strategy will typically include the four Ps – price, promotion, products, and place – to reflect the wants and desires of consumers in your target market. A product is an item that satisfies what consumer needs or wants. Price is the amount a consumer pays for the product. Promotion is all of the methods of communication and a marketer may used to provide information about the product. Place – or distribution – refers to the providing the product at a place that is convenient for consumers to access.
For sales strategy, provide a summary of the people most likely to purchase your products or services. Address the most urgent need they would be seeking to meet or which major benefits would attract them. Discuss where and how you will sell your products and services. Will you sell only online? Will you have a brick-and-mortar location?
The final category is Financial Information. This section should include financial statements and forecasts for the business. The financial structure of your business is usually described in three financial statements: the balance statement, income statement, and cash flow statement. As a new business you should include estimated start-up costs, a projected balance sheet, a projected income statement, and a projected cash flow statement for 12 months. All statements should be projected one year forward.
Please remember that I am sharing only the basics. However, I have discovered some wonderful resources that I will discuss and post next time.