Business plans are the most important starting points for any new venture or start-up. This document acts as a formal statement that defines your business goals and the plan to reach those goals. Ideally, it should also contain background information about the team that is attempting to reach those goals. A well written business plan also acts as a document that can persuade others, including banks, to invest in what you’re creating and trying to achieve.
Though there are many different types of business and ventures coming up these days, but the basic categories of information and questions that need to be covered by a business plan are fairly standard.
Here are the 5 key elements of an ideal business plan:
1. Executive Summary: This is one of the most important and critical elements of a business plan and is generally presented in the beginning of the document. An ideal executive summary should not be more than two pages in length and should provide an overview of your business concept, key objectives of your business, management team, your product or service offering, target market(s), competitive advantages, marketing strategy, and a brief summary of your financial projections.
2. Product and service: This is the next most important section of you business plan document. This is the section where you define, in detail, your unique product of service. It is always better emphasize on the benefits (not the features) of your product of service. Make sure to establish your unique selling proposition. This means you have to show not only how your product or service is different but also why it is better.
3. Market Analysis: In this section you should illustrate your knowledge about the particular industry your business is in. A through market analysis forces an entrepreneur to become familiar with all aspects of the market so that the target market can be defined and the company offering can be positioned strategically. Always keep in mind to defining the market in terms of size, structure, growth prospects, trends and sales potential.
4. Operations and Management: This is the section where you define the people behind your business i.e. who would be running the operations engine. This sections should give a detailed description of your team players and highlight their qualifications. This sections should also highlight the logistics of the organization such as the various responsibilities of the management team, the tasks assigned to each division within the company and how they plan to work together.
5. Financial Plan: Last but not the least, a well researched financial plan is the key to any business success. This is a section which needs the maximum amount of research and data. Typically, one has to show three to five years’ worth of projected financial statements, including income statements, pro-forma balance sheets, and monthly cash flow and annual cash flow statements. Another important element to include in this section is assumptions you used in forecasting your revenues and expenses data.
Well, apart from the above there are other sections that you could add to elaborate and give your plan a more detailed dimension. You could include things like competitive advantage, design and development plan etc. The ultimate objective should be to present your plan in the most detailed and descriptive format. Another thing to remember is that any good business plan is never meant to be written once. A knowledgeable entrepreneur understands that an business plan evolves as their business evolves and as their environment changes so its always better to re-visit your plan on a quarterly or monthly bases.