A business plan is a document that shows where a business wishes to go and how to get there. Emphasis is put on proving that goals are achievable thus necessitating providing information about factors that influence the firm’s ability to realize these goals. Also, it shows how the firms position itself favourably in the face of competition and environmental forces to ensure it accomplishes its purpose. A business plan is useful for both existing and new organizations and existing organization as it provides a sense of direction in today’s business environment characterized by cut-throat competition and environmental complexities. The success of a business is to some extent pegged on the quality of its business plan. Entrepreneurs should engage experts when preparing a plan to ensure the plan in place propels the business to success
What to include in a business plan
A business plan is a document that shows organisational goals and strategies in place to realise them. The contents of business plans differ in line with the diversity among businesses and industries. However, an effective business plan should conform to the right structure to ensure all important areas are covered. The following eight parts should be included in a business plan to make it serve it effective.
The executive summary gives the plan’s outlook by summarizing the main sections. It should be short and straight to the point but at the same time ensuring all important information is incorporated. An executive summary should be written after completing other sections of a business plan. The purpose of this section is to inform the reader about the plan’s contents which helps them to decide whether the document is worth reading. Besides, some target audiences only read the executive summary due to time constraints. It is therefore imperative to ensure the executive summary is appealing to the audience.
This section gives detailed information about the business. What the company stands for should be clearly articulated by providing its vision and mission statements. A brief history of the company should be given which include the year it commenced operations and a clear growth path. Regarding growth, emphasis should be put on showing different aspects of growth such as the number of employees, product portfolio, number of branches, revenue, and asset base. Financials are needed to show the company’s current performance outlook. The nature of business should be discussed and specific needs that the company seeks to address shown. Both short-term and long-term goals must be discussed showing the strategies in place to realise them. Also, showing how the company is planning to make profit is necessary where efforts are made to show the suitability of its business model in the lenses of profitability.
Products and Services
A business plan should provide sufficient information concerning the existing and intended products. Each product should be described showing the specific benefits that its consumers get. Unique features about the products are discussed to show the capacity to penetrate the market. Product development activities should be discussed giving details of how the firm introduces new products and improves the existing ones.
A good business plan should be based on a thorough market research which identifies the market potential and the competitive forces facing a business. Grouping the target customers into segments is necessary and information about each segment given. Market data should be provided showing the historical, current, and the projected trends. It is also necessary to describe the industry and give key statistics. Competition analysis is an important part of the market analysis and it involves identifying the main competitors that the firm faces. Strengths, weaknesses, and market shares of these competitors should be outlined with clarity.
This section of a business plan shows how the firm will position itself to exploit market opportunities in the face of competition and other environmental forces. Costs and pricing should be discussed in details to confirm the financial viability of the opportunity. Details of marketing operations are essential and should emphasise on explaining how the firm plans to endear its products to the potential customers. In the course of giving market operations details, providing information about promotion and distribution activities is necessary.
Management and Organisation
This section focuses on the firm’s internal environment comprising of elements such as human resources, organization structure, and shareholders. Profiles of top managers are given showing their qualifications that align with the organisation’s human resource needs. Information about the owners is also provided and their stakes in the company identified. An organization chart that identifies the major departments in the organisation is provided.
This section is used for financial projections to illustrate the firm’s future financial performance. Financial documents such as a budget, projected balance sheet, income statement, and a cash flow statement are included in this section.
Supporting items of a business plan are put in the appendices. This section is included when there are documents and items seeking to clarify other sections of a business plan.