It has to work on paper first. Your business, that is. A business plan is a written summary and guide to starting and running a business. A well-written plan creates a blueprint for success and can help you obtain financing, create strategic plans, and follow marketing and sales plans. The business plan should be your first step in the process of deciding whether to start a business. Determining if the plan “fails on paper” first can help prospective business owners avoid costly (and ultimately pointless) investments. So what does the business plan include?
- Requires objective analysis and critical thinking
- Serves as a guide to operations
- Communicates the purpose and vision for the business
- Creates the foundation of a financing proposal for investors and lenders
Your particular business may be unique. However, all business plans share a few common elements.
Executive Summary: How Will Your Business Make Money by Solving a Problem?
The Executive Summary is an outline of the purpose and goals of your business:
- Brief description of products and services
- Business objectives
- A description of the market in which your business will operate
- Justification for viability (including a brief look at competition)
- Growth potential
- Funding requirements
For many people, the Executive Summary is the make-or-break section of a business plan. Companies solve customers’ problems; if the Summary cannot clearly describe how your business will solve a particular problem – and profit by doing so – in one or two pages, then it is possible the opportunity does not exist, or that the plan needs more work.
Products and/or Services – The “What?”
This section should clearly describe the products and services the business will provide. Highly detailed or technical descriptions are unnecessary – use simple terms and avoid industry buzzwords.
Key questions to answer:
- Are the products or services already on the market or still in development?
- When will products be ready for market?
- What makes your products or services different?
- Is product price a concern?
- Will operating costs be low enough to allow a reasonable profit margin?
Market Opportunities – The “Who?”
A good business plan analyzes and evaluates customer information, purchasing habits, buying cycles, and willingness to adopt new products and services.
Business plans should also address topics including sales and marketing, competition, production and/or operations, management and financial projections.
Examine Challenges & Solutions in Your Plan
A good business plan recognizes that challenges exist and shows how you will overcome roadblocks. You need to recognize that competition exists and find ways to overcome that competition. If funding is a challenge, identify boot-strapping or partnership opportunities. If the management team lacks critical skills, identify those skills and develop a plan to improve weaknesses or bring in advisors or other assistance. Don’t just focus on how great an idea may be; focus on what could derail an otherwise great opportunity and how those challenges can be overcome.
We have additional information available in our Business Resource Center under the topic Starting & Planning Your Business. Remember that fortune favors the well prepared. Good luck!