A business plan serves as the basis for starting and running your new business, and its elements are one of the first things people will look at when deciding whether or not to fund your company. It’s important to know what you should include in your business plan so that you don’t leave anything out that’s important.
A business plan is typically written in a formal report style, which means that it should include,
- an executive summary
- an overview of the company background
- management approach
- mission statement or philosophy
- market analysis
- product descriptions and analysis
- marketing strategy
- sales projections and budget
In addition to these sections, more modern plans may contain other sections such as human resources strategy.
But for our discussion here, these are the eight key elements of a business plan that you need to know:
1) Company overview
The company overview is probably where you’ll take some time to define your overall mission. If it’s a startup,
- What problem are you looking to solve?
- What service or product do you hope to deliver?
- What competitive advantage do you offer over existing solutions in your market space?
This section should also briefly describe your customers, how big your target market is, and why now is the perfect time for your business concept.
This is what readers will see first, so make it count. A good overview will provide context for everything that follows and should generally be no more than 2-3 paragraphs long. In it, describe your industry, how your business compares to other companies in your industry and why someone would want to work with you instead of them.
Keep it straightforward, succinct, and clear. Don’t forget to emphasize why your company exists in 100 words or less. Remember that there are only two ways someone might stop reading at this point: if they don’t think you have something interesting to say or because they become disinterested in what you’re saying.
2) Executive summary
On one page, quickly explain your business, how it’s different from your competitors, and why it’s a good idea. This is also where you’ll want to describe who will buy your product or service, when you plan to launch, and how much you hope to raise in financing.
It should be written in simple language without legal jargon; focus on making it easy for people to understand (not necessarily easy for lawyers).
The first thing many potential investors will do is read your executive summary—ensure they have no trouble understanding exactly what you do and why they should invest in you.
3) Market analysis
As many people will tell you, the elements of your business plan doesn’t need to be particularly original. However, there is one critical aspect that makes it stand out from similar plans: its market analysis.
Your market analysis should answer such questions as:
- Who are my competitors?
- What makes my product or service different?
This is not only important for getting investors on board but also for making sure you have truly identified a gap in your industry that hasn’t been filled before. To gather enough data, do proper communication to reduce the gap before you dive into the next step.
There are certain communication apps for business that help make this part easy to handle. Don’t worry if your plan sounds too much like someone else’s — it’s better to have an overly-researched plan than one without concrete knowledge.
4) Product or service description
This section should describe your business’s product or service in terms that would appeal to your customers. Be specific—include information about materials, colors, smells, features, etc.
If you sell women’s clothing, for example, mention colors and fabrics; don’t just say women’s clothing. Avoid technical jargon whenever possible; keep it simple and use appropriate examples.
Also, include any special care instructions here and details about warranties or return policies. Lastly, if you have images of your product or prototype on hand, i.e., you are selling something physical, be sure to include them as an attachment with your business plan—they will help illustrate your ideas better than mere words ever could!
5) Sales strategy
Prospects will either buy because they need what you’re selling, or they will buy because your sales pitch convinces them that it’s in their best interest to do so. To accomplish either goal, you must present your product or service as a solution to their specific needs and concerns, says Jason Edwards, the chair of the Agent Editor Board of Agent Advice.
The better you understand these concerns and how you can alleviate them through your product, or services, and price point—the more effective your sales pitch will be. That is why it is important to have a strong understanding of prospect behaviors. For example, if prospects are always looking for ways to save money over time, then offering reduced pricing on longer contracts may be an effective way for them to do just that. A contract automation platform can help make pricing negotiations easier and more seamless.
6) Marketing strategy
A marketing strategy is an overarching business plan that will help lay out exactly how you will bring in revenue and grow your customer base. In the same way, it would be folly to start building before you’ve figured out what you’re building, it’s foolish to put all your energy into acquiring customers without a solid plan on how to keep them engaged.
Your marketing strategy doesn’t have to be elaborate. In fact, writing it can help get your creative juices flowing. In its basic form, a marketing strategy should address:
- What kind of target market are you going after?
- How are you going to reach those people?
- How will you capture their attention?
7) Management approach
This part of your business plan outlines how you intend to manage your company. The management approach is essentially a roadmap outlining what key personnel will be involved in various aspects and departments, along with their responsibilities.
For example, if you’re incorporating your business as an LLC (limited liability company), you might want to include descriptions for each member of your board or executive team so that investors know who they’re dealing with.
Further down in your business plan, you can outline roles and responsibilities for each member. If investors put money into your company, they need to know what they’re getting themselves into!
8) Financial projections
By producing detailed financial projections for your company, you’ll have a better idea of how much capital you’ll need to start or grow your business. These projections should be updated as frequently as possible—ideally, every month or two.
They will also help you assess your progress, which is key to knowing whether your plan is on track. Financial projections are not only useful in terms of gauging startup costs and growth potential; they can also help with hiring decisions by revealing areas that may be lacking in staff. Consider it another step toward building a successful business.
If you want your business to succeed, a well-thought-out, detailed business plan will be a must-have. We have covered the eight key elements of a solid business plan that you must know and implement.
Piyush Shah is a 6 figure affiliate marketer and has helped grow multiple businesses from nothing to making insane business figures. He is currently working as Head of SEO at Dukaan.