All businesses need a plan. No matter if you’re a startup or a company that’s been in business for years, having a plan on paper is useful for all sorts of purposes. You’ll need a business plan when applying for funding through SBA loans or launching a new product.
With a solid business plan, you’re able to focus on the right factors and develop a roadmap to your company’s success. Studies have shown that entrepreneurs with a formal business plan are 16 per cent more likely to succeed than those without.
Are you ready to write your first business plan? Here are eight must-have elements.
1. Executive summary
The executive summary is your business’ elevator pitch. What are the mission, vision, goals, and proposition of your company? What is your product or service? Who makes up the leadership team?
If you’re using the business plan to secure funding, be sure to include high-level financial information as well as growth plans.
The executive summary should include high-level information that summarises more detailed sections of the business plan. While this should be the first part of your plan, you may find it easier to write it last. This way you can ensure you have all of the vital information.
2. Business description
This is where you’ll provide in-depth information about what your company does. Provide a background on how your company came to be. The business description should tell your company’s story. When writing this section, be sure to answer these questions:
- What’s your business model?
- What is the legal structure?
- What market opportunities are available?
- Where are you located?
- What is the drive behind your company?
In the business description section you will also want to talk about your projected growth. By the end of this section, company backers should know the ins and outs of your company.
3. Market analysis
Chances are you did plenty of market analysis before starting your business. Now is the time to put all of that critical research on paper. The market analysis section of your business plan needs to include competitive research including information about what other companies are doing and their strengths.
Market analysis is all about finding themes and trends within your target market. With this research you’ll have a solid idea of what your competitors are doing in order to succeed, giving you the chance to do it even better.
Market analysis should also include profiles of your target audience and ideal customers.
4. Organisation and management
While you touched on some of this information in the executive summary, this is where you’ll go in-depth with your company’s structure. In this section you’ll want to describe how your company is structured as well as who is running it.
Incorporating an organisational chart is a clean and concise way to display this information. Be sure to show each leader’s experience and business contributions.
You’ll also want to describe your company’s legal structure including future plans for incorporating or forming a limited or general partnership.
Describe what your company sells or the service that you offer. This section is important, even if you have a highly niche industry. Be sure to not only describe your offering but also explain how your offering benefits customers. What consumer need are you providing?
In this section you’ll also want to explain your product’s lifecycle. Including information about patient filings, copyrights, or intellectual property should too be explained.
6. Funding requirements
This section is where you’ll provide information about how much money you need, why you need it, and how the funds will be used. When writing this section, be realistic and as detailed as possible. Know how much it costs on average to do what needs to be done.
You’ll also want to include a best-case as well as a worst-case scenario. Create a timeline so that lenders have an idea of your present and future plans. Provide information about buying a physical office, insurance, permits, licenses, and more.
7. Financial projections
Financial projections will act as a supplement for your funding request. This section is all about convincing a lender that your business will be successful financially. For already established businesses, be sure to include cash flow statements, balance sheets, and income statements from the last few years. Here you’ll also want to list any collateral.
Startups and new companies need to provide a financial outlook for at least the next five years. Ensure you provide capital expenditure budgets, balance sheets, and forecasted income statements.
An appendix is only needed to provide supporting documents that were requested by the lender. Here you can attach reference letters, credit reports, permits, patents, resumes, and anything else that has been asked for.
By having a thorough business plan in tow, you can best position your company to ensure it’s on a path to success.
When writing your plan, be sure that it includes these eight must-have elements.