Starting a business is extremely exciting but almost every entrepreneur will tell you that they didn’t do enough planning before they began. Don’t make the same mistake! “If you fail to plan, you plan to fail!”
Before you begin, create a well thought out, thorough business plan. A summary of main components that should be included in every plan is below.
This business plan description utilizes elements of Dave Lavinsky’s article in Forbes called “Business Plan Outline - 23 Point Checklist For Success”, December 3, 2013
The executive summary is the first section of your business plan but write it last. It is your means of summarizing the opportunity and how you will succeed. A concise description will help you sell your concept to future investors or banks. Explain your financial projections in a short paragraph.
You and your team’s accomplishments, even if not in the industry you are embarking upon, are critical here. Discuss who your team is and provide a brief biography of each person and their accomplishments as they related to why you will succeed.
Discuss the market you are entering (i.e. what is your product or service and what general market it represents). Expand this section by discussing how this market generates profit, competition, and other factors affecting this market (i.e. government regulations, commodity prices, exchange rates, etc.).
Here you will need demographic information. Start with Chestermere’s demographics.
The demographic information should align with your customer base. A high-end “luxury” item will need to be supported by a population that has the available disposable income. Chestermere, for example, is one of the highest earning populations in all of Canada.
Utilize the demographic information to determine your customer base.
Use this formula to estimate your customer base:
Customer base (market size) = number of customers X amount customers will likely spend
Discuss the competition: those that directly compete by selling nearly the same product or service. Then discuss the indirect competition: those that sell a product or service that will appeal to those clients you are targeting. Be specific, describe the location of these competitors, identify their strengths and weaknesses, discuss if they are growing, stable or cutting back operations (and explain why they are cutting back operations if they are).
Be sure to consider what gives you the advantages over your competition (i.e. competitive advantages). The question to answer is “why will you succeed relative to your competition?”.
Expand on your product or service and discuss your pricing. Then discuss all the means you will use to attract customers. Ensure that you know the costing of this promotion to add it to your budget. Don’t forget to consider how customers will purchase from you.
Examples of Marketing Plans:
This portion of your plan details your daily activities, number of staff, and duties of staff. Discuss your specific goals and dates for achieving them.
For an in depth explanation of an operation plan visit: www.entrepreneurmag.co.za
The management team section is mostly about the roles, strengths, and means of mitigating the weaknesses of your company’s leadership. Even a very small business should have a few advisors or “Board of Directors”. This group will help provide guidance and ideas going forward.
This section is crucial and usually involves a spreadsheet listing your revenue and expenses, assets and 5 year projections (sometimes call proformas). Create an income statement, balance sheet and cash flow statement. The links below provide you with more information about proformas, income statements, balance sheets and cash flow statements
Budgeting Financials for Dummies
It is important to note that the financials must clearly explain the need for a loan or investment and detail how that money will be used. Also explain how you will leave the business eventually (this is called the exit strategy).
Place all supporting documents here and make sure to reference them in the body of your business plan.
Read more about the need for a business plan at:
5 Reasons You Need a Business Plan for Long Term Success
Why is a Business Plan Important
The Importance of Business Planning