6 Must-Haves for an Effective & Successful Business Plan
A comprehensive business plan is crucial throughout every step of your business, from pitching to potential investors to keeping day-to-day operations flowing smoothly to outlining a path for future growth. Without a concise business plan, entrepreneurs often operate without clear and achievable goals and wind up missing out on thriving opportunities.
Price-Waterhouse-Coopers cites two-thirds of fast-growth company CEOs as having a business plan. Why? Because just the simple act of having to create a business plan forces those involved to critically examine business operations, strategies, tactics, and facts. Instead of putting these things off for a future date, it makes responsible parties form offensive and defensive plans before an opportunity or crisis presents itself. Armed with strategies and contingent plans, a business will be more prepared.
So what exactly should a business plan include? Depending on the audience, the level of detail can vary. However, there are a few key items that every business plan should include. Keep reading to ensure your business plan meets the minimum requirements.
1. Executive Summary
Start your business plan off with a powerful punch. Short, sweet, and to the point, the executive summary is a brief (1 to 2 page) outline of a company’s purpose and goals. It should include all of the important highlights of the business plan, so it should be written last. Some readers will only read this section, so it’s important that it be well-written, clear, and concise.
2. Business Description
In order for a business to succeed, the foundation and purpose of the business needs to be understood. A business description should outline the mission statement, organizational structure, ownership, and team members. If the business plan is for a pre-existing company, include a description of the company history and past performance.
3. Products and Services
Describe the products and/or services the company will provide along with why a demand for them exists. What makes this product or service better than or unique from anything else on the market? Emphasize why buyers will be inclined to purchase them and what the pros and cons are. Illustrate how much it will cost to deliver what you’re selling.
4. Marketing and Sales
It’s important to know how a business plans to market itself in order to understand how it plans to capture its target audience. Describe the target market, including market demographics, growth, and trends (both current and predicted). This section should also showcase a table that outlines market forecasts. Use this section to discuss the state of the company’s industry and how it plans to contend with its competitors.
5. Goals and Benchmarks
The most critical part of creating goals and benchmarks is making sure that they’re measurable. If they aren’t, there’s no way to properly gauge improvement or decline. This section should outline how progress will be measured, what sort of strategies and implementation will be used to meet set goals, and how the company will address goals that are/aren’t hit. Define your milestones with dates, budgets, and specific responsibilities.
6. Financial Projections
Provide a record of financial history, including any dealings or investments, to show the company’s current financial position. Detail any strategies that will support projected growth and include a break-even analysis. Illustrate projected profit or loss, cash flow, and balance sheets to show the business’s overall financial health.