What You Need When Writing Your Business Plan
Benjamin Franklin is quoted as saying, “If you fail to plan, you are planning to fail.” Writing a business plan is an important step if you want to successfully start a new business or grow your existing business. While a business plan is essential if you plan to seek investors or obtain financing, you need one even if you are not looking for outside capital. Often referred to as a “roadmap to success,” a well-written business plan can help you reach your goals by focusing on what you need to do in order for your business to succeed.
Your business plan should include the following:
The executive summary is an overall outline that explains why your business will be successful. If you plan to borrow capital or need to attract investors, the executive summary explains what your business will do, what it needs to succeed, and why your business has the qualities necessary for success.
The market analysis describes the industry your business will operate in and includes a description of the market or markets within the industry, the current situation, and the future outlook. You should include forecasts for changes in the makeup or size of the market and the demand for products and services.
Your business description will provide details on the products or services that your business will provide to meet the demands identified in the market analysis and how you intend to access your target market.
In the competitive analysis, you will evaluate your competition looking for strengths and weaknesses that you can exploit to provide your business with a competitive advantage. Explain how you will take advantage of your competitors’ weaknesses and minimize the competitive impact of their strengths.
In the marketing plan, you will specify how you will reach the target market and position your business to maximize its share of the market. It will include an explanation of how you plan to brand your products or services and the marketing channels you will rely on to promote the business.
The financial plan is where you determine how much money you will need and when it will be needed. You will identify the size and timing of fixed and variable expenses, cost of materials, and assets that need to be acquired. You will project revenues and identify when you expect the business to be able to turn a profit. The financial plan will help you determine whether you will need external funding and in what amount. It will also show how you will be able to repay any loans and provide a return on investment to outside investors.
Operations & Management Plan
The operations and management plan describes who will be managing the business and how the business will operate. It identifies key management team members already in place and those that must be hired. It also describes the operation of the business and the short term and long-term goals that must be reached to achieve success.
While this task may seem daunting, don’t let the prospect of writing your business plan be a deterrent to your entrepreneurial spirit. A business plan is simply a detailed summary of where you want to go and how you plan to get there. You may think that you already have a solid understanding of what you need to succeed, but this plan will show you if there are any gaps that need to be filled.
Written by David Mackusick
David Mackusick, JD, CPA is an assistant professor with Forbes School of Business® at Ashford University.