Striking out on your own can be a freeing experience, but as with any good adventure it’s best to have a road map. A business plan isn’t just for banks or investors to read when you’re trying to secure start-up financing, it is also a roadmap that will project and outline the route your company plans to take to grow and succeed. There are a few key components every business plan should include. We’ve summarized a few for you here.
1st Component: The Executive Summary
You will need to include an overview of your business concept – your experience and background and why you decided on this enterprise -- as well as key objectives of both your business and your plan. You will also want to include the ownership structure, management team, the product or service you are offering, who your target market is, competitive advantages, your marketing strategy as well as a summary of your financial projections. Think of your executive summary as a snapshot of your business plan as a whole that touches on your company profile and goals.
2nd Component: Business Description
This will be an overview of what your business does, the business history (if there is one), your vision or mission, your objectives and the ownership structure. This is your chance to help the reader understand (and remind yourself!) the goal of your business.
3RD Component: Products and Services
This is your chance to expand upon the marketplace needs that your business is trying to satisfy. You can do this by explaining the features and benefits, the competitive advantages and outline any research and development you have done or plan to do.
4th Component: Describe the Industry
The Industry Overview is the place for you to demonstrate the viability of your business by including the size and growth (and growth rate) and other trends and characteristics of your industry. You will want to discuss the key markets in your industry, how your customers will buy your products or services and explain the markets you will be targeting.
5th Component: Marketing
How are you going to penetrate your target market? How are you going to differentiate your products or services from everyone else in your industry? What are your plans for promoting, advertising, public relations, brochures, flyers etc? What is your sales strategy?
6th Component: Operations and Management
This section of your plan should include a profile of your management team, your company’s organizational structure, your human resources plan, the location(s) of your business and facilities, your production plan and a sample of day to day operations.
7th Component: Financial
The financial projection section of your business plan is very important since most creditors will want to see what you expect your company to be able to do in the next few years. You’ll need to show three to five years’ worth of projected financial statements, including income statements, balance sheets, cash flow statements and capital expenditure budgets. It is important that you document all of the assumptions you used in forecasting your revenues and expenditures.
Starting your own business will not be an easy road, but with the right business plan you can map your way to success! If you’d like to be with other like-minded entrepreneurs, check out our philosophy and co-working space.