These are the essentials of a great business plan.
A detailed business plan is one of the basic and most essential requirements when starting any kind of business. Without a proper business plan, it becomes hard to keep track of its progress and growth. Once you have taken the time and effort to create a thorough business plan, you will know exactly what you need to do in order to make your business a success. Not only will this be a personal road map for your business, but it can be critical in getting you the funding that you need for your business idea.
Five important factors of a business plan
Here are the vital elements that should be included in any business plan:
- Executive summary
You need to explain your business idea in the plan, as well as the pros and cons. The feasibility of the business and the reasons why the business will be a success should also be explained in this section. This section should give a clear indication of the business, its return on investments and its products and services.
- Product research
The product or service has to be described thoroughly. Not only should the plan contain the details about the products, but it should also contain the benefits of the product and how it differs from other products currently available in the market.Any disadvantages associated with the product should be mentioned too. A concise explanation about how the products will be developed should also be given. If there are any plans to introduce new products or services in the future, then the business plan should include research about such products too.
- Market research
You’ll need a description of your target market, as well as the strategies that you are planning to use to gain as big a share of the target market as you can. Specific customer profiles from different target markets should also be mentioned. The business plan should define your main competitors and should also include the pros and cons of your products over those of the biggest competitor. Underestimating the strength of your competition can often lead to business failure. You should research the competition thoroughly so that you can find ways to gain a competitive advantage.
- Sales plan
Sales of products are what drives any business and guarantees its success. Hence, you should devise a marketing and sales plan that is specifically aimed at your target market rather than the general buying public. Your business plan should also include sales strategies and promotional activities that you are planning to undertake to increase sales.
- Financial details
The financial details of your business should be detailed clearly. Not only do you need to mention the amount of investment needed for the business, but you should also mention the avenues where you expect to receive the funding from. Pricing of your products, sales forecasts and return on investment should also be calculated and specified in the business plan.If there are plans of future expansion of the business, you need to provide the financial requirements, as well as how you hope to raise the money for the expansion. A good business plan should also include financial forecasts for at least three years out. Your reasoning for such forecasts should also be mentioned.
Three pitfalls to avoid
- Not knowing your numbers. By paying careful attention to the financial details of the business plan, you will be able to determine the exact capital expenditure that is required for your business. Your return on investment projections will also make it easier for you to receive adequate financing from different banks and major financial institutions.
- Being sloppy in presentation. A business plan should always be drafted and printed in a professional manner. The plan should not be too verbose and should highlight all the main points clearly.
- Rushing your summary. The executive summary section of the business plan is always included at the start of the plan. However, you may want to wait till you finish writing the rest of the business plan to write the summary. By doing so, you can ensure that you won’t miss out on any vital points and that it is a clear summary of your entire business plan.