So you have a business idea, great! Now you simply have to actualize it, starting with a business plan. A business plan helps you get funding for your business idea, but your proposal needs a solid structure.
Business plan outline
The key to a good business plan is the outline. It gives an overview of exactly what is in the business plan.
Your outline should ideally be:
- Well structured: It should be structured so that each section answers a very specific investor question about your proposed business.
- Have a seamless flow: Your outline should offer a very natural progression through the plan so that the investor who reads it has the option of jumping to specific parts for clarification or reading it from start to finish with the flow in mind.
The outline should read as follows:
- Executive Summary.
- Business description
- Market analysis
- Competition analysis
- Sales and Marketing plan
- Management plan
- Operations plan
- Financial plans and analysis
Once you have an outline, you have to break down the outline into subheadings and subsections so that each has a detailed explanation. The idea is to have your business plan cover all possible question areas for the investors and to use this as your road map to success.
1. The Executive summary
This section will appear first in the business plan even though you will write it last as it is the summary of the entire business plan. Ensure that your executive summary has the following key sections: a brief overview of your business or proposed business, your vision and mission statements, and the details of exactly what you are planning to offer in concise and precise language.
The executive summary section is intended to get the investor excited or intrigued in five minutes or less. It should be a summary – note the subheading – and not a detailed description of your business. If you are unsure about what exactly to put in, ensure you have covered these four areas:
- Who you are
- What you are selling/ planning to sell
- How big and profitable this can get
- How much you need in investments or as a loan.
2. The Business Description
This is the section where you will provide in-depth details of the business: what problem(s) are you solving, what are your products/services, who are your target customers etc. You will also provide a brief overview of the market, the trends, and the projected sales. Not too much detail, though, because you will dive deeper into this in another section. You will also be brief about your team, your expertise, and your competitive advantage. Again, this is not the section to be too detailed about this part as it comes up also later.
In this section, you will do a deep dive into your customers/consumers. This is a very crucial part of your business plan, so take the time to research and write out the details of who your primary target customer is. These details include: where they are geographically, their online presence and preferred social media, their needs and how these needs are being currently met (or if they are being met). This will show that you have planned ahead and give a basis for why you chose certain operational and marketing plans in the later sections. Your market analysis’s main objective is to show investors that the market is large enough to support your proposed business, that you know your target consumer, and that there is a gap in the market that your business will fit in to.
In the competition analysis section, you will discuss your likely competition. Go into details about who your biggest competitor would be in the market; their profit margins, their marketing techniques, their operations and management and more. Also, give a plan of how you will overcome the barriers for entry into that market, how you will distinguish yourselves from the competition in the market, and how you will gain an advantage over them.
Sales and Marketing Plan
This is where you will outline your marketing strategy, detailing how you plan to drum up sales. It will include your proposed pricing, your advertising and promotion plan and your product/service benefits. Also, include your market analysis, including the best marketing platform/medium to use for your target customer base and how you plan to use it. Think of this section as your first marketing campaign for your business. If the investor cannot buy it, then your consumer will not either.
In the management plan, you will outline your business’s ownership, management and legal structure. Who will own it and by how many shares? Who will be the rest of the shareholders and does the investor get a larger percentage of shares? Where is the company registered or where shall it be registered? How will the internal management team be structured? Do you meet all legal requirements and what will be the legal structure? This is where you will include your expertise and that of anyone you already have on board. This will breed confidence in the investors that you know what you are doing. If you are simply the brains behind the idea, make it clear you will be a general manager (CEO, Director etc) or silent partner and show that you plan to hire qualified individuals to manage the specified fields such as marketing, finance, tech and innovation, and more. It would be helpful if you already had a team of qualified people that you can give a detailed account of.
In this section, you will give information of how your business is to be run. Suppose this will be a physical business and not online. In that case, you will specify the business’s location and the facilities needed on top of the employee, supplier, and inventory specifications you would give for any business operations plan regardless of whether it is online or not. If it is an online business, ensure you specify how you plan to mail your products, share your services and what medium you would be using.
This is the section that will show your investor if this is a good investment of not. It should show them that your business will be stable, profitable, reliable, and not too risky. You must show you have a good sense of start up costs, funding needs, the costs of doing and running a business, and the projected income. You will need to provide a description of your funding requirements in detail, your in-depth financial statements so you prove you can be trusted with money, and a financial statement analysis. This is where you present those three main financial documents of any business; the balance sheet, the income statement and the cash flow statement or cash flow projection for a new business.
Finally, you are at the end. This last section will include any additional details that will add credibility to your business idea. It could be data, product photographs, permits, resumes, patents, legal agreements and/ or credit histories.
And congratulations! You have completed your business plan. Check it over several times to ensure it is error-free and as detailed as it needs to be.