If you’ve never written one before, you may be clueless on where to start when writing your business plan. Well, luckily today we’re here to help you out on what you should cover in a conventional business plan to help you start your own enterprise!
A business plan creates a 30% greater chance of growth, so it can certainly help you effectively develop your business. It also increases your integrity, where entrepreneurs with a plan are 129% more likely to push forward with their business beyond the initial startup phase.
Before we begin with looking at how you can structure your business plan, let’s start with looking at the reasons behind writing a business plan…
Why write a business plan?
Business plans may sometimes seem like an unnecessary burden when deciding to build your own business. Why do I have to spend time writing something when I can just start it now?! Well, they’re actually much more useful than you may think.
Here are the eight reasons why you should write a business plan:
- It will help you direct your business
- It will help you reach milestones
- It may help you get funding
- It helps you understand your competition
- It helps you understand your customers
- It will help you determine financial needs
- It should document your revenue model
- It gives insight into the feasibility of your venture
With these points being put into consideration, what are the main sections you must include in a business plan?
What do you include in a business plan?
It’s essential that certain topics are thoroughly researched and covered in a business plan. It’s important to complete a business plan with references to support your primary research, and have these in Harvard format at the end of the business plan. Any tables, charts, or visual aids can be put in an appendix at the end of the document.
So – without further ado – lets dissect each section of a business plan to help you understand exactly what to include:
Section #1: Executive Summary
This section should be a brief summary of the elements discussed throughout the business plan. It’s important to remember that this is not the introduction, and it’s usually easier to write this up at the end once you’ve completed each section.
Section #2: Description of Business
Within this section, start off by giving an introduction to your business idea, and what it actually is. Discuss the opportunity which you’re seeking to exploit, which may be framed in terms of the specific value that you propose to create.
Explain what’s so special and unique about your value proposition, and why is it going to work? Use some primary research to determine current trends you’re expecting to explore in the industry, while also looking at what makes your product/service better than your competitors. Discuss your business model, how do you intend on making this business idea profitable?
Sub-sections summary:
- Description of the business
- Opportunity you are exploiting (Primary Research) & Current industry trends
- Value Proposition
- Competitive Advantage & Strategy
- Business Model
Section #3: Industry Analysis
This section dives more into the industry you’re looking at entering. Within this section, you must look at the saturation of sellers in your target industry, and what they are also offering their customers. Consistently reference your research findings to support your claims. Use a PESTLE (Political, Economic, Social, Technological, Legal & Environmental) analysis grid to determine the external elements which may have an impact on your business.
Complete a competitor analysis grid which gives a deeper insight into what type of competitor they are (direct, indirect, or future). Support this with a Porter’s Five Forces framework, which evaluates the competitiveness of a market, the potential for new entrants, the power of suppliers, the power of customers, and the threat of substitute products. Finish off with discussing what the likely actions from these competitors will be when you enter the market.
Sub-sections summary (use online resources and reference throughout):
- PESTLE Analysis highlighting any external industry trends (can put in appendix)
- Current offerings of competitors (including a competitor analysis grid in the appendix)
- Competitor Analysis (Using Porter’s Five Forces)
- Likely Competitor Actions
Section #4: Market Analysis
In this section, you should start off by discussing the market for your business idea. What’s the size and scope of the market? What are your predicted sales in the first 3 years of operating? Make sure you discuss any key assumptions you’ve made to get these results – you won’t be able to predict perfectly, so just briefly discuss why the results won’t be perfect! It’s essential to provide quantitative information supporting your claims.
Provide an explanation of the customer segment that your business will serve, and provide evidence of demand for your product/service. It may be a good idea to get some primary research for this part, as it shows you’re going to the effort of getting study results yourself. You can do this either quantitively or qualitatively – questionnaires or interviews are usually the best way to do this.
Support your research with secondary research from existing literature online – and don’t forget to cite any of your findings and reference in the bibliography at the back of the business plan!
Include a section which highlights your marketing strategy. A great way to do this is display the marketing mix on how you plan to promote and distribute your product. This will include a description of your product/service, the price of your product/service, promotional strategies for your product/service, where your product/service will be located, and how you plan on building better relationships with people.
Sub-sections Summary:
- Size & Scope of your desired market
- Target Customer Segment
- Predicted Sales
- Key Assumptions Made for the predicted sales
- Evidence of Demand (Primary & Secondary Research)
- Marketing Strategy (Product, Price, Promotion, Place, People)
Section #5: Operations Plan
In this section you should dive further into your business model, and how you intend on delivering the value you talked about in the “Description of Business” section of the business plan. List the critical resources required in order to bring your business to life, and the financial costs that will come with acquiring these resources.
Finish up with putting an operations plan together, which must include the nature and location of your production/service process; staffing; and operations and service management issues, e.g. capacity, Intellectual Property issues, partnerships, business control and scalability.
Sub-sections Summary:
- How you intend on delivering value with your business model
- Critical Resources Required to start operations (incl. the cost of these resources)
- Nature & Location of the service process/production
- Staffing
- Operations & Service Management Issues (capacity, intellectual property issues, partnerships, suppliers, business control and scalability)
Section #7: Financial Plan
As expected, the financial plan is all about money. For this part, you should discuss how you plan on funding and managing the business idea. Discuss the fixed and variable costs more specifically, as these will be included in your cashflow forecasts.
Provide a revenue forecast which is supported by your sales forecast in the in the “Market Analysis” section. Remember to include any more key assumptions you have made to achieve these forecasted figures. Support your figures with any relevant primary and secondary research.
Move onto typing up your 3-year cashflow forecast (preferably done with Microsoft Excel) – this must display the figures you got in your revenue and costings forecasts. Then, complete a Break-Even analysis which shows potential investors when you are expected to start making a profit since the initial investment.
With your cashflow forecast, you can then complete a Profit & Loss Statement which shows your business’ predicted annual profit margin.
It may be a good idea to include your exit strategy within this section, as this shows your overall plan for the business. Whether this is opening to the Public, or selling the business – it shows the reader exactly what your long-term plan is.
Sub-sections Summary:
- Funding
- Fixed & Variable Costs
- Revenue Forecast
- Exit Strategy
- Break-Even Analysis
- Cashflow Forecast
- Profit & Loss Statement
Section #8: Conclusion
Now you’ve completed each section, it’s a good idea to summarise the business plan to help everything tie up. Discuss the risks that come with the business idea, including legal issues, intellectual property issues, and ethical issues (if any).
You may decide to include the exit strategy in this section instead, but try and finish with summarising each of your sections.
Sub-sections Summary:
- Legal Issues, Financial Risks, Ethical Issues
- General conclusion to summarise all of your points made
Section #9: References
It’s a good idea to have all of your references in Harvard referencing format.
Section #10: Appendix
This section is good to store all of your tables, charts, and any other visual aids which you don’t want to include in your main body of text – remember to cite them in your main body!
We wish you the best of luck with your business plan…
We hope this article has helped you with your business venture! Have any more tips on building a business plan? Give us an email at [email protected], or let us know on our LinkedIn or Facebook Pages!
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