Fundamental Components of a Sound Business Plan for Success
Everything has a starting point, and the starting point of your very own startup is a business plan. A sound business plan puts every single piece of information regarding your venture down on paper and is certainly not something that can be taken lightly if you want your business to be up and run in no time and continue to grow and achieve new heights of success from there on. It is of prime importance that you have a strong plan before you make a presentation to one of your investors in hopes of receiving funding to kick-start your business. Unfortunately, however, it is quite common for people to not have a firm understanding of the components of the business plan and what each of them should highlight. In this blog post, we aim to inform you about the fundamental sections of a business plan in an attempt to prepare you for your next pitch.
As the name suggests, the executive summary can be considered as the elevator pitch. It touches on pretty much all other components of your business plan, but in a short, concise, and understandable manner without getting into any technicalities. Since it is essentially the summary of the other components which make up your business plan for success, it is recommended that you draft it after you have finished creating the plan, so you have a complete picture when you write it.
Right after the executive summary comes the description of your business. This is the part where you are required to name your company and describe the products or services that it has to offer. You can also include the location where you intend to establish your business, the mission statement, the legal structure that you have in mind, and the market opportunities that you would like to tap in on. In other words, the description is primarily what tells the investor why you want to start your business and what it will do.
Next in line is the market analysis. With a thorough analysis of the market, you get to understand the kind of competition that you will likely be facing, the competitive edge that you have over your rivals, where you currently stand in the market, and where would you like to be in the coming years. In simpler words, the market analysis informs you about what the market currently looks like. It is recommended to always include an analysis regarding the target audience and the customer profiles in this section of your business plan.
This is the part of your plan that talks about the structure of your organization. Remember that it is important to highlight the members of the team and what their roles and responsibilities are going to be. It is an indispensable component since it tells the investor that you are familiar with how the business is going to be run and that there are no loose ends or shortcomings in terms of the human resources or otherwise. You can highlight that you have a competent team in this section in order to improve your chances of getting the funding or financing to kick-start your business.
A business plan without a thorough sales strategy is destined to fail. You must take your time to design a strategy that informs your potential investor about the approach that you intend to use for pricing of the products or services, as well as its relationship with all of the other components of your business. Simply put, your sales strategy highlights how you anticipate making profits and how long you will take to get to the break-even point.
This is perhaps the most important component of your business plan, especially from the investor’s point of view. This is where you cut to the chase and tell them about the kind of money you will be needing to establish your business. Remember that you must have a firm grip on the budget that you have designed for your business. You will be cross-questioned on pretty much each element of the funding requirement and you must be able to justify why you need the money that you are requesting in order to gain the trust of the investor and convince them to finance your business.
Last but not least, it is important to have a separate section that highlights the financial projections of your business. This component of the business plan should discuss the revenue growth and how you intend to finance your business in the upcoming years. Financial projections work closely with the sales strategy to inform the investor about the time it’ll take for them to see a return on their investment.
Now that you are familiar with the fundamental components of a sound business plan for success, it is time for you to create your plan accordingly in an attempt to improve the likelihood of receiving the financing you need to reach your goals. The importance of a properly formatted business plan can only be highlighted by the fact that your potential investors are almost 100% likely to not take your proposal seriously if it is missing any of the components of a business plan mentioned above. Include all of these elements, put in the correct information wherever required, and you will already have grabbed their attention.
One way to do this is by hiring the services of a professional business plan writer who knows the ins and outs of such a plan and drafts it to perfection. But whether you choose to do that or believe that you are capable enough to write the plan yourself, you have to ensure that it is of top-notch quality if you want to attain the investment you need to move forward.