A Business Plan Is Your Vision of Success
What is your business’s key to success? Unique products, flawless customer service, nimble operations–or something entirely different? As a business owner, you may instinctively know what makes your organization succeed in today’s competitive marketplace. A business plan helps you share that knowledge with important stakeholders–including key employees and potential investors and lenders.
A good business plan tells the story of your company, illustrating where you are now and where you hope to be in three to five years. It provides a detailed description of your organization’s current state and paints a picture of what it will look like in the future. Most important, it provides–in as few words as possible–the information others will need to make financial and strategic decisions, and is typically organized using the following sections.
Cover page and table of contents
The cover page is simply a title page for your business plan document. It should include the name of the company, address, phone number, owners’ names, and contact information. It should also include the date on which the document was finalized and published. The table of contents helps readers navigate through the document and identifies page numbers for each of the sections.
The executive summary is essentially your elevator pitch–an abridged version of the business plan that describes to readers why your business is worthy of their attention and possibly their investment. It should be no longer than one page, but should contain all pertinent details.
For this reason, it is often easier to write this section last. It should answer readers’ primary questions–i.e., are you looking for funding, is the document a roadmap for management, or both? As you draft your executive summary, keep in mind that many readers will decide whether the subsequent pages are worth reviewing based on this important section.
This section should provide more detail on the nature of your business. What product or service do you provide, and how is it produced? Who are your key advisors and managers, and how does their experience benefit your organization?
What is your legal structure? Where are you located and why did you choose this location? You might also want to use this section to describe the genesis of your business–i.e., how and why you decided to launch the venture. Was there an industry gap you wanted to fill? A need you could meet? What makes your business idea worth pursuing?
Market analysis and marketing strategy
Perhaps the most influential section of your business plan, the market analysis is how you convince readers that your business will be successful. It should provide a specific and detailed analysis of your target market, including what you have done to maximize your opportunity within it. Who are your current and potential customers, and why?
Summarize any market research you have conducted to prove the viability of your business. How big is your potential market? Who are the major competitors, and what is your strategy for differentiating your company from them? If your business plan is intended for potential investors or lenders, this section will help convince them that you truly understand your market and are an expert in your industry.
If your plan is primarily designed to educate key employees, it will provide the basic information they need to strategize. This section should also summarize your marketing strategy, or how you will promote your products and services. Describe any planned advertising and communications tactics, as well as sales models.
This portion of the business plan is designed to help your readers understand where you are now, financially, and where you hope to be. You should include all current and projected (or “pro forma”) financial statements. These should include cash flow and income statements, as well as a balance sheet and break-even analysis. This section will likely be scrutinized the most, so be sure it is completed carefully. Its purpose is to educate readers about the use of resources–including any debt and equity financing you hope to get–proving to them that your company can and will manage money effectively.
Take time and care
Many business owners–particularly entrepreneurs just starting out–loathe spending time writing business plans, preferring instead to jump into the more exciting arenas of creating, selling, and managing their business. However, a business plan represents a critical opportunity to draw key stakeholders into your vision of a future filled with success. Be sure to devote the time needed to produce an effective and engaging document.