BUSINESS PLAN ESSENTAILS
The Importance of a Business Plan
Every company should have a business plan. Just as people use checkbooks or online spreadsheets for finances, and instructors develop lesson plans, a business needs a guiding plan to track current activities and to prepare for the future. There are many ways a written plan can help a business to launch and maintain a successful venture. Although many business owners lack experience in developing a long-term plan for their operations, legal and financial experts can assist company owners in establishing a set of goals and objectives to keep the business sustainable.
Below are several components a business plan might include for a new business. This is the information that stakeholders such as a financial lender, investors, or a board of directors will be looking for.
Mission or Purpose
The company’s mission, or purpose, needs to be stated at the beginning of the plan. Name, company type, and primary activities should be described in this section.
The type of company structure should be indicated here, such as a partnership, corporation, or
Start-up Capital or Investors
Funds needed to start the company or boost operations should be clearly explained. Whether these are one-time funds or continuing costs also should be clarified. Stakeholders want to know if they are being asked to donate, invest, or buy shares if the company goes public, and what type of return on investment they can reasonably expect.
In addition to startup funds or one-time dollars, the company’s proposed operating budget should be detailed. Specific line items will need to be listed as expenditures, as well as expected income. A profit and loss statement, real or anticipated, should be included, along with any expected future gains.
All major job positions should be listed, along with brief biographies of employees currently filling them. This includes education, experience, and any special skills needed for a particular position.
A flow chart is helpful in showing how the company’s troubleshooting mechanisms work. It needs to indicate the reporting structure and problem-solving cycle from initial report to repair and final review. This ensures that a structure is in place to address issues as they arise before they spiral out of control.
Whether the company is selling products or services, these commodities need to be clearly described or explained, including volume, shipping (if relevant), and price. Are the product descriptions aptly
Marketing and Public Relations (PR)
Marketing is one of the most important components of doing business successfully. The best product in the world won’t achieve high sales without a solid marketing plan. An effective business strategy requires
You will want to include some type of analytical tool results to show that you have carefully prepared the plan and considered various aspects, both positive and negative in your objective analysis. Strengths, weaknesses, opportunities, and threats, or SWOT, is a popular tool for analyzing a plan’s chances of success. There are other tools that can be used for the same purpose.
When a company opens its doors, there should be a set of short-term objectives to address during the first two to three years. For example, the business owner may want to pay off all startup debt within two years so that the company is operating in the black. Another short-term goal may be to increase marketing efforts by thirty percent within three years. Your overall business strategy can be included in this part of the plan if desired.
As the title implies, these goals are aimed at longer periods of time, perhaps five to ten years. What does the company plan to achieve within the first five years of operations? How will it change over the next ten years? Even though these estimates may be vague, stakeholders appreciate seeing the big picture from the business owner’s point of view for a better idea of where the company is headed.
As can be seen above, developing a detailed plan that describes a proposed or existing business can be time consuming and require research. If you lack the resources to create this type of important document, look for professional help to get it done, as a business plan is your calling card to others who can choose whether to invest in your company’s future.