Business plan – Introduction
The business plan is an executive summary is an encapsulation of your entire business plan and, more importantly, it tells the reader what you are seeking. Most business plans seek funding; however, some seek partnerships or strategic alliances. Let the reader know up front what you are looking for. This way the reader doesn’t have to sift through your business plan trying to figure it out. Even though this is the first section your reader will see, it is the last section you should write.
Business Opportunity
Briefly explain what your business does and the opportunity you plan to pursue. The opportunity you describe has to be enticing enough, yet realistically attainable, for the reader to be interested in your plan. Explain what the opportunity is and how your business will capitalize on it.
Products/Services Description
Briefly describe the products/services your business will offer. What makes your products or services more appealing than those of your competitors? What market(s) are you trying to target?
Financial Potential
Briefly discuss the revenues and profits you expect to generate over the next three years. Sell the reader on why your business presents a good investment opportunity. What kind of return should an investor expect to realize on their investment? What is your projected business growth compared to similar businesses in your industry? Make sure the reader knows why he or she should put their trust and money into your hands.
Business Description
Describe the business you are in or you want to enter. What products do you make? What services do you offer? What customers or markets are you trying to serve? Identify whether your business is a retail, service, or manufacturing operation. Include a statement or two describing the industry or market in which your business will operate.
Products / Services – Introduction
The product /services section explains what you are going to offer as product line. It indicates where you will source your supplies and inventory, compares your products in general to those in the marketplace, and explains your research and development plans. Write your section introduction so it presents the most intriguing aspects of your products. What is the most exciting characteristic or benefit of your product line? What is that one thing that is going to spark sales immediately? Take the excitement of your product offerings and summarize it for the reader.
Products – Product Overview
Describe your products, including features, benefits, and pricing. Realize that your reader probably does not have the same background as you. Don’t fill your product descriptions with industry slang. Instead, try to use terms that are simple and easy to understand by someone who is outside your industry. If you overcomplicate a product description, even if the product is highly complex and highly technical, you risk losing the reader’s attention. However, never “talk down” to your reader. If he or she has industry experience, feel free to provide more technical information as appropriate.
If possible, include brochures, photographs, or diagrams in your text — or marketing materials in the appendix — to help explain your products.
When describing your products, emphasize unique features and benefits. Doing so can help distinguish you and your business from your competition and highlight the potential of your business.
Products – Competitive Analysis
Describe in general how your products compare to competing products in the marketplace. Don’t go into great detail about other products, but identify your competition, where their products are sold, and how yours compare to the competition. This section should be a brief competitive overview. You will have the opportunity to dissect your competition and compare their products feature-to-feature to your products in a later section.
Products – Suppliers and Inventory
Depending upon the nature of your business, your suppliers might play a small or a very large part in how you manage your business. If your company manufactures products, indicate from whom you will be acquiring raw materials. Regardless of whether you are manufacturing original products, or reselling those manufactured by someone else, it is a good idea to identify alternative suppliers of goods. Don’t let your business success hinge on only one company.
Inventory and its management can make the difference between a success or failure of a business. Not having enough inventories on hand to meet customer demand can devastate your marketing efforts. If there’s a price drop in raw materials, having too much inventory on hand can drive your production costs up. What approach will your business take to ensure you maintain proper inventory levels?
Services – Introduction
The services section explains to the reader the service or services you will be offering. It compares your services in general to those in the marketplace, describes how you will deliver your service to customers, and explains your research and development plans.
Write your section introduction so it presents the most intriguing aspects of your services. What is the most exciting characteristic or benefit your services will offer? What is that one thing that is going to spark sales immediately?
The Industry, Competition and Market – Introduction
Since the industry, its competitors, and the market (customers) are all related to each other, this section is often the largest section of a business plan. Taken together, these components identify your business environment and should be presented in enough detail to convey to the reader you understand where your business fits into the “big picture.” ( in your case it is double meaning).
Write your section introduction so it highlights your business potential. What is the great opportunity your business plans on exploiting? Is it a rapidly growing industry, stale competition, or an emerging market niche?
The Industry, Competition and Market – Primary Competitors
Identify the companies with which you will be competing. You may be entering an industry with just a few, large competitors, or one that is occupied by dozens. If there are many, it is sufficient to name and describe only the major players; however, be sure to identify those with whom you will directly compete. Depending upon your industry, you may have local competitors, but many companies, especially those that offer products, experience global competition.
Discuss your competitors’ opposing product lines or services and clearly identify why a customer would select yours over theirs. Here’s your chance to do some selling. Summarize your competitive advantage over competing products and tell the reader how you will penetrate the market and capture market share. For products, competitive advantages may include price, features, quality, and distribution. For services, competitive advantages may be price, speed of delivery, equipment, experience, or knowledge.
The Industry, Competition and Market – Customer Profile
Describe the characteristics of your target market. Common ways of identifying customers are demographics, geographic, and psychographics. Demographics separate customers into groups by factors such as age, gender, income, and education. Geographic: separate customers by location. For example, you may target customers that are in your city, county, state, region, or country. Though more difficult to measure, psychographics separate customers by lifestyle, such as interests, activities, and opinions.
The same type of market breakdown may be applied to businesses rather than customers. To determine a profile of potential customers, businesses can be categorized by number of employees or total sales (demographics), as well as by location (geographics). The more accurately you can define specific characteristics of your target market, the easier it will be to develop market strategies that will appeal to your market and help your business achieve success.
Marketing Plan – Introduction
The marketing plan is a crucial component of your business plan. It explains to the reader how you plan on reaching customers, making sales, and reaching your financial goals. Too often good ideas fail due to poor marketing plans. Your marketing plan should address the standard “Four P’s” of marketing: product, price, place, and promotion.
Your marketing plan will explain to the reader what you are selling (product or service), how much you will sell it for (price), where you will sell it (place), and how you will advertise it (promotion). In addition, it addresses how you will measure the effectiveness of your marketing activities and how you will stay in touch with your customers’ needs.
Marketing Plan – Competitive Advantage
Begin by discussing your competitive advantage. Name the aspects that will set you apart from others offering similar products or services. Use as much specific and verifiable information as you have available. Whatever advantages you have over your competition should become the basis of your marketing effort. The marketing plan explains how you plan on communicating these advantages to your target audience. Remember, the key is to make the customer understand the benefits of purchasing your product or service rather than those of your competition.
Marketing Plan – Pricing
Discuss in some detail how you arrived at your selling price and where your pricing compares to your competition. The pricing level you select is an integral part of your marketing plan. Pricing heavily influences your marketing methods. Lower prices typically mean fewer features and less service than higher prices. Make sure your pricing model equates to the perceived value you are trying to convey for your products or services.
In general, there are two methods of pricing. The first method is to take actual costs and add your desired level of profit. This “cost plus” pricing method is often used when little or no competition exists. The second method is to take a look at what your competition charges and develop your prices to reflect where and how you want your products or services to be positioned and perceived in the marketplace. Do you want to be known as the low price leader? Do you want to be known as the premium quality choice? The price you charge communicates to the customer what he or she should expect.
Marketing Plan – Distribution Channels (“place”)
No matter how big your market or how great your business idea, you will have trouble making sales unless you can reach your customers in a timely and economical manner. Explain to the reader what methods and resources you are going to use to deliver your products or services to your customers. Are you going to sell to them directly? If so, will you need to hire and train salespeople, a support staff, and supervisors? Will you use outside representatives, independent agents, resellers, or distributors? If you plan on using an intermediary (not selling direct), explain how the relationship will work and identify what costs and margins these parties require.
Marketing Plan – Promotional Plan
How are you going to promote your products or services to your customers? How much are you willing to spend to acquire a new customer? What is your advertising strategy and budget? These are the questions your promotional plan should answer firmly and directly.
Promotional activities include advertising, personal selling, public relations, and sales promotion as well as free PR in the written and digital media. How are you going to get your message across? Will you rely on personal selling, direct mail, telemarketing, newspaper ads, television/radio commercials, billboards, customer referrals, press releases, the Internet, or trade publications? To help you create a promotional plan, take a look at your competition and see what is working for them. Consider how you might use similar methods to communicate your competitive advantage.
Smart Tip: Remember, promotional plans can vary widely from industry to industry and even between different competitors in the same industry. Also, promotion plans can be very complicated, detailed, and expensive. You don’t need to provide a detailed plan within your business plan, but make sure you provide a general overview of your promotional activities and as accurate a budget as possible.
Marketing Plan – Feedback
No marketing effort will be effective forever. In order to maintain and grow your customer base, you need to identify feedback mechanisms to see what’s working and reveal early signs of changes in your customers’ buying habits.
Operating Plan – Introduction
Your operating plan explains the “nuts and bolts” of how your business will function. It should address the location and description of your business facility, required operating equipment, supplier and vendor relationships, and needed personnel.
Operating Plan – Location
Describe the physical location of your business — in a strip mall, in an industrial park, or even in a virtual location such as a website.
Management, Organization and Ownership – Introduction
This section presents the management team, how the business will be organized, and the ownership structure. It should provide information that will give your readers confidence in your management‘s ability to grow and guide your business. Show that your business organization is functional with clear lines of responsibility.
Management, Organization and Ownership – Management/Principals
Identify the prominent members of your management team or any other key individuals (principals) that will play an important role in running your business. Discuss the division of responsibility or areas of expertise. This group may include founding entrepreneurs, investors, board members, and certain key employees. Describe their backgrounds and how their experience pertains to your business.
Show that your key people have the education, experience, and dedication to give your business every chance of success. If you have not yet hired all of your key people, explain what qualities you are seeking and describe what efforts are being made to hire them.
Management, Organization and Ownership – Professional Consultants
You may decide to retain outside help to run your business. Examples include attorneys, accountants,
advertising/marketing agencies, and others. If you plan on utilizing outside help, identify who they are, describe their experience pertinent to your business, and your contractual arrangement with them.
In a smaller business, you may not need to hire individuals to perform all of the necessary functions to operate your business. It simply may not be an effective use of money to hire full-time professionals to perform specific job functions. An option is to retain individuals or companies to perform these functions for you.
Goals and Strategies – Introduction
By now, you should have a solid idea of the goals for your business and some idea of the obstacles you might face. The goals and strategies section should show the reader how well you have considered your overall business concept by addressing your business’s keys to success and the barriers it must overcome to achieve them. Convey that you have a solid understanding of the environment in which you will compete and that you have realistically considered the specific areas that will be critical to your successful operation.
Write your section introduction so it states your long-term goals and highlights the strategies you will use to achieve them.
Goals and Strategies – Business Goals
Discuss the overall goals of your business. These could include sales revenues, operating profits, opening new markets, increasing market share and others. Be sure these goals match your financial projections.
Goals and Strategies – Keys to Success
Identify those few, specific items that are critical to achieving your goals. If you face outside circumstances, which might be barriers to achieving your goals, identify what those are and discuss your strategy to overcome those problems if they arise.
Goals and Strategies – Future Plans
You may have long-term plans beyond the three-year planning time frame, such as introducing new products or developing new services. If they are core to your continued business success or open up new, significant opportunities, disclose them here.
Financial Assumptions – Introduction
Financials are the ultimate measuring stick for determining the attractiveness of your business opportunity.
Unlike the rest of your business plan, which explains your business concept, this section explains to the reader where numbers came from.
The key to “believable” financial projections is having sound assumptions. An assumption is nothing more than a statement or paragraph explaining the basis of how you arrived at a particular number or series of numbers.
Basically, where did the number(s) and rationale come from?
Financial Assumptions – Assumptions
In this section, you should explain the logic you used to arrive at the numbers on the Reports you wish to include in the Appendix of your business plan. There is no need to explain every line in your financial projections, but you should address the major ones.