A business plan is a document that defines a company, its objectives, and how it plans to achieve them. You can think of it as the written version of a road map for the firm over a set duration. A business plan is an incredibly crucial document for firms of all sizes and in all industries. The document aims to inform internal (stakeholders, etc.) and external (investors, etc.) people about the core business activities of the company. It helps startups win investors over before they have a proven track record. Founders can also secure funding from banks and other financial organizations with the help of a business plan. For established companies, it acts as a framework for decision-making and guides the development of strategies.
Things you have to include in your business plan
A business plan outlines all vital aspects of a business, from its marketing strategies to operational processes. Companies use them to define all activities undertaken in their firm. Consequently, this keeps all executives, stakeholders, and employees on the same page. You should regularly update your document to reflect the changes you make in your business, no matter how small they are.
Moreover, business plans are never identical. Even if two companies have similar products, they will not have the same business plan. A business plan is like a thumbprint of a business. However, many companies have similar elements in most business plans, such as market research, product descriptions, etc. These components help make up the document. Since there is no template you can follow, it is up to you to decide how to proceed with your business plan as per the requirements of your business.
1. Executive summary
The executive summary should be the first part of your business plan since it is the most critical part of the document. However, write this at the end, so you can effectively summarize the entire plan without missing something. The executive summary is like the elevator pitch of the document. It should be concise but comprehensive and communicate the deeper purpose of your company. This includes the problems you are solving and how you are solving them. The executive summary should grab your readers’ attention since this is where you convince them to keep reading. You can add the company’s mission statement and values and highlight what you plan to cover.
2. Products and services
Your product/service is the entire reason you need a business plan. Hence, it makes up an integral part of it. Describe your product, what it does, how it looks, etc. Then define your USP, and why investors should invest in you. This segment is where you set differentiators between you and your competitors. Therefore, highlight unique features, key aspects, and distinctive elements in your product. The executive summary attracts your reader’s attention, then the products and services compel them to read more. Hence, add everything that will get your reader to turn the page.
3. Market and competitive analysis
There are two significant types of analysis every business should conduct. They are market and competitive analysis.
A market analysis’s purpose is to help the company identify its target audience, secondary audiences, and places where you can find them. It also helps reduce risk from informed decisions by researching a market segment. By defining your market shares, you can develop strategies to maximize your conversion rates.
The competitive analysis includes a deep dive into all your competitors for insight into their products/services, sales, and marketing. It helps you build your business strategy since you know what your competitors are doing.
The market and comparative analysis will tell your investors how much knowledge you have on the industry, market, and your commentators. It will also tell them the probability of the success of your product.
Read More: How to do Competitive Analysis in SaaS?
4. Marketing and sales strategy
Your market analysis results ties into the marketing strategy. From the former, we get insights into customer behavior and preferences. You can use this information to develop your marketing strategy. Your business plan should highlight important aspects of your marketing strategy. It should include data on your customers, your strategies to reach and convert them, and how you are funneling your customers. Your sales target is as important as your marketing one, if not more. Highlight your USP (unique selling point/proposition) that will convince your customers to pick your product over your competitors. Then you can use data from your competitive analysis to refine your marketing strategy.
5. Financial planning and projections
Even startups with very few sales are required to include financial planning and projects for their business/product. This part convinces your reader that you know what you are doing and your steps towards profit. The financing planning covers how you aim to generate revenue and how much it is going to be in profits. Additionally, you need to disclose your sources and the amount of funding you have at hand or plan to get. Therefore, outline your financial statement and cash flow projections.
If you want to ask for funding, add ‘funding request’ as another subheading and outline your financial requirements. You should add what you will use the money for over the next five years.
This part of the document is where your budget planning is highlighted based on your cash flow. It outlines past budgeting tactics and numbers. Then you add what your current budget is and how it is working for your business. With the past and current data, you predict budgeting for the future. This part of the business plan is detailed and elaborate. The budget segment accounts for where the money is going and what it is being used in.
An appendix is an index of supplementary material or document that supports the main document. People add it at the end of the business plan. If the business plan is your product story, then the appendix is the factual aspect that helps your claims. Here, an appendix holds all the information that is stated in the main document. It includes data from studies, analyses, and strategies. Such as numbers, charts, maps, legal documents, resumes of founders, data from past sales, etc.