A business plan serves as a road-map to keep your business on track. The length of your plan depends on how much detail you want to include and can range anywhere from 3 to 30 pages. It’s important to take the time to create a detailed business plan as many lenders require it when you start to look for funding. Here are the 7 essentials for a well-crafted business plan.
1. Executive Summary
This section does not have to be long. It is an overview of your whole business plan. Summarize the key points from steps 2 through 7 that best describe your business.
2. Company Description
Answer two simple questions. What do you do? Who do you sell to? These answers will explain who you are, what you plan on selling, and how your business will operate. Think of this section as a more detailed elevator pitch. List your short and long-term goals, mission statement, and vision statement.
3. Market Analysis
Explore your market thoroughly through surveys, questionnaires, and interviews. Is there a need for your product or service? Who are you targeting? How big is that target? Who are your competitors? Analyze your findings and explain why you should be forming a business. Your marketing data should include historical, current, and future projections for your product.
4. Organizational Structure
Who else will you need now and in the future for your business? Do you already have people ready to join you? What are their backgrounds and are they properly qualified? Include descriptions of departments, management team, and owners. If there are others with equity in the company, what is the extent of their ownership and involvement? List job responsibilities for the key positions. If you already have people on your team, list their key achievements
5. Marketing and Sales
How will people know you exist and then buy from you? Avoid underestimating the cost of marketing and the impact it can have on your business. Describe your marketing strategy and how you intend on penetrating the market. This section should include your plans to tackle the 5 P’s of marketing: product, price, place, promotion, and people. Describe the product you will offer and the benefits it offers. How much will you sell your product? Make sure you will make a profit from the initial price. Place refers to both online and offline locations. Will you have a physical location? How much of your business will be conducted online? Use your market analysis to estimate the costs of reaching your target market. Do you have the right people to help you run your business? Will your people take care of the people you do business with?
6. Funding Needs
What does your business need to cover set-up costs and ongoing working capital requirements? Will your business have enough working capital to bridge the gap between sales and collecting on credit terms? How will you use the funds you have? Evaluate the capital you have and the capital you need. Solve for the difference and secure funding before it becomes a problem for your business.
7. Financial Projections
Estimate your sales versus expenses for the first 12 months of your operation. Pinpoint where you break-even after your fixed costs (rent, payroll, utilities). If possible, include forecasted income statements, balance sheets, and cash flow statements.
Writing a business plan should plant a clear picture in your mind of what your business has and what your business needs. Does your company have the necessary funding to grow and thrive? Invoice factoring or accounts receivable funding grows with your business. Stop waiting the 30 to 60 days to get paid by your customers. Sell your receivables and have the cash flow to reach your business goals.