The Essential Parts of a Business Plan
Are you ready to be your own boss? Are you prepared to pursue the passion project of your wildest dreams? These are two of the top reasons for entrepreneurs—like yourself—to start the long, challenging, and rewarding journey of opening a business.
A business starts as a vision and evolves from there. Are you ready to make your vision a tangible reality? What are the next steps required for bringing this to life?
First things first: you need a plan. You need to carefully consider all parts of a business plan and lay out what your company hopes to do and how they hope to accomplish it. This essential information is what you’ll show investors, the city, employees. . .
Spend your time crafting one that embodies your company’s mission. Make it unique to you. Someone may read your executive summary and realize they’re ready to invest right then!
Here are the bare bones of what to include in your business plan. It’s up to you to fill in the spaces.
1. An Executive Summary
This is an essential first part of every great business plan. It does what it describes: summarizes what’s to come with the plan. An executive summary should be good enough to stand on its own!
What does that mean?
An executive summary includes everything your business plan includes, but in a briefer manner. It should describe the following:
- Your company’s name and location
- The products or services you’re planning to offer
- A thoughtfully-crafted mission statement
Your summary is like a proposal or a cover page. Make it compelling and straightforward.
2. A Company Overview
Here’s where you can start getting into some more detail. At this point, your business plan can be as long as it needs to be.
This is the time to explain what your company is all about.
- What is your name and what does it mean?
- What is its history of conception? History of ownership?
- What are its short-term and long-term goals?
Let’s run through one example.
If you’re opening a brewpub, here is where you can explain the styles of beer that you’d like to focus on brewing or the type of food you plan to sell. You can tell a bit about where your location will be and how the building is getting used.
3. An Industry Analysis
You need to prove that you’ve done your research.
What audience is your industry targeting? What demographics is it most popular with? Per our brewpub example—what age group is drinking craft beer right now?
Your industry analysis is an excellent place to state this.
Not only that, but what’s the competition look like? Or the industry itself? You need to have an idea of the projected future of the industry you’re attempting to enter into.
Now is your chance to state the facts and then provide your solution. Explain the fundamentals of your business and why (and how) it’s going to impact the industry.
4. Your Marketing Plan
Your marketing plan says everything about how you hope to attract, get, and keep customers.
It answers some basic but essential questions:
- Who are your target customers? (By this point, you know the answer)
- How do you plan to reach those customers?
- How do you plan to retain those customers and keep them coming back?
Use your Unique Selling Proposition (or USP) to your advantage in this area. This explains how your company is unique, how you distinguish yourself from others.
You need to think about marketing materials, which includes everything from a quality website to paper brochures. It also includes promotional tactics like social media accounts, event advertising, or whatever is specific to your company.
5. Your Ownership/Team
If someone is going to invest in your company, it helps to know the history of who’s behind it. Whether that’s you, the solo entrepreneur, or a small team that you work with, investors (and others) need to know the people involved. This will help them make informed decisions and know who they’re connecting with.
What is your history and how does it affect your company? What skills, knowledge, and experience are you bringing to the table? Did you go to school, and if so, what was your area of focus?
A small look into you (or your team) humanizes your project. This space also allows you to highlight your strengths.
6. Your Financial Plan
You knew this was coming—it’s time to talk money.
Now, this shouldn’t be a hurriedly scrambled-together piece. You need to prepare this portion of your business plan with the utmost care. Talk to an accountant and bring real numbers to the table.
At this point, you’ve considered the state of your industry and ran some numbers. Now put these numbers into place with an account and make some tangible projections.
Your financial plan should include information like:
- Your startup costs
- The cost of maintaining
- A projection of the next few years to come
- How you plan to use and allocate funds
- How you plan to pay employees or do salaries
- Your plan with investors
Let’s go back to our example of the brewpub.
In your plan, you’d include things like the cost of the brewing equipment, the price of Front of House furniture and supplies, the construction costs. Anything of that nature deserves careful consideration—and a place on your business plan.
7. Your Products and Services
Here’s where you get to talk about the fun stuff!
It’s time to go into precise detail about your plan. The things that you think about day in and day out—you get to brag about them here. Talk about your concept, your vision, your mission!
Are you going to give your spent grain to local farms for cow feed? State that here.
Are you featuring locally-sourced goods? Tell your investors here.
Is your space going to be so aesthetically pleasing, no one will ever want to leave?
You get the idea. This is where you pour a little of your heart and soul out into the plan. You can even include a “Q & A,” allowing whoever you’re sharing the presentation with to ask any questions they have about your product.
This space is also an excellent place to mention any plans for community involvement, such as events, collaborations, or unique things you plan to do. This can mean anything of importance for your business, whether it be hosting a fundraising event or ultimately creating your own charity.
Don’t be afraid to set some high goals here. This section of your business plan can focus on as far into the future as you’ve imagined thus far!
Why Do I Even Need a Business Plan?
A business plan is right for you, your future investors, and your business. Without it, you’ve got nothing to show for your work, investors don’t trust you, and your business doesn’t have outlined goals. As you can see by now, the best business plan considers all factors of business carefully.
It has some positive benefits, too. If you’re still on the fence about crafting a plan, here are some things to know:
- A business plan helps you get finances (unless, of course, you don’t need those)
- It gives you credibility
- It enables you to prioritize your goals, both short-term and long-term
- It gives you an outline you can revisit and update regularly to meet your company’s needs
- It allows you to have more control in the decision-making and operations
- It instills you with helpful knowledge that you can use throughout your company’s existence
- It gives you a competitive edge over others who have not prepared as well
- It gives your product or service a better chance at success
You can show your business plan to bankers, investors, accountants, the city. When you go to apply for permits, bring your policy with you. When you go to ask an investor for funding—bring your business plan with you.
If you care about the success of your passion project, it’s clear: you need a plan.
The Necessary Parts of a Business Plan
They’re all right here. The rest is easy—and if it’s not (say, you’re not the most excellent writer, or you’re terrible at math)—don’t be afraid to ask for professional help.
Many people have done this before you, and many of them are willing to impart some knowledge. And if you’re not lucky enough to know some of those entrepreneurs, well, that’s why you hire them!
Of course, there are optional parts of a business plan—such as your professional advisors. Who are you looking to for inspiration and information? Having a substantial list of advisors may help you look more credible to potential investors.
Let this list guide you in the right direction, not steer you into a box!
Good luck on your startup journey. Making your dreams a reality is rewarding work. And whatever you do, avoid these ten common startup mistakes at all costs!