The Seven Elements of The Business Plan
- Executive summary
- Company description
- Market analysis
- Organizational management
- Sales strategies
- Funding Requirements
- Financial projections
1. Executive summary
The executive summary is the elevator pitch for your business. It distills all the vital information about your business plan into a relatively short space. It’s a high-level look at everything and should include information that summarizes the other sections of your plan.
2. Company description
This is your chance to describe your company and what it does. Include a look at when you formed your business, your mission statement, and your values. These are the things that tell your story and allow others to connect with you. Some of the other questions you can answer in the company description section include:
- What is the business model? (What are your products and revenue sources?
- Who are your intended customers?)
- Do you have unique business relationships that offer you an advantage?
- Where are you located?
- Who are the founders and owners?
- What is the legal structure?
- What is your projected growth?
Answering these questions narrows your focus and shows potential lenders and backers how you view your venture. Your company description can also include descriptions about the type of business you’re running and an organizational chart of the business owners’ roles.
3. Market analysis
This is your chance to look at your competition and the state of the market as a whole. Your market analysis is an exercise to see where you fit in the market and how you are superior to the competition. As you create your market analysis, you need to make sure to include information on your core target market, profiles of your ideal customers, and other similar market research.
Part of your market analysis should come from the trends in your area and industry.
4. Organization and management
Use this section of your business plan to show off your management team superstars. Venture capitalists want to know you have a competent team that has the grit to stick it out. You are more likely to be successful when you have the right management and organization for your company. Make sure you highlight the expertise and qualifications of each member of the team in your business plan.
5. Sales strategies
How will you raise money with your business and make profits a reality? Your sales strategy can answer these questions. This section is all about explaining your price strategy and describing the relationship between your price point and everything else at the company.
You should also detail the promotional strategies you’re using now, along with strategies you hope to implement in the future. This includes your social media efforts and how you raise your brand awareness. Your sales strategy section should include information on your web development efforts and your search engine optimization plan.
6. Funding requirements
This section will outline how much money your small business will need so that you can make an accurate funding request. Make sure you are as realistic as possible. You can create a range of numbers if you don’t want to try to pinpoint an exact number. Include information for a best-case scenario and a worst-case scenario. You should also put together a timeline, so your potential investors have an idea of what to expect.
For instance, it can cost between $200,000 and $500,000 to open a coffee shop, and profit margins can be between 7% and 25%, depending on costs. A successful business in the coffee industry can see revenues of as much as $1 million a year by the third year.
Some of the things the coffee shop would include in its timeline are locating premises, obtaining food handlers’ permits and business licenses, arranging regular product supply, and getting the right insurance. The best and worst case scenarios for how long this will take depends on state and local regulations.
No matter your business, you should get an idea of what steps you need to follow and how long they typically take to complete. Add it all into your timeline.
7. Financial projections
The last section of your business plan should include financial projections. Your forward-looking projections should be based on information about your revenue growth and market trends. You want to be able to use information about what’s happening, combined with your sales strategies, to create realistic projections that let others know when they can expect to see returns.
If you’re looking to accurately analyze your financial statement, income statement, loss statement, cash flow statement, and balance sheet while projecting future cash flow, you may want to consider using accounting software like Quickbooks from Intuit.
Utilizing accounting software will allow you to recognize your deficiencies, acknowledge your strengths, and craft a detailed financial plan. Doing so can increase your likelihood of securing a favorable business loan.