Writing a business plan for the first time can seem like a daunting task.
And to be quite honest, most first time entrepreneurs don't bother to do it properly (if they do it at all).
Some just do not see the point, if they are not seeking funding then there doesn't seem to be a pressing need for a printed document when they already know what they want to do.
They just want to get on with it. You can empathise with that right?
But honestly, the true value of writing a business plan is not in having a freshly printed document (that in all probability will end up sitting on a shelf somewhere never to be looked at again...), it is the steps you go through to develop that plan that matter.
Developing a business plan requires you to look at the market, your potential customer base and your competitors. It makes you consider your product offerings and your ability to serve your target market. You will find out what your strengths are and where you need to improve and you will gain a really clear idea about what you business should look like and where you are aiming to be in the future.
So what should you include in your business plan format?
Sections Typically Included in a Detailed Business Plan Format
A detailed business plan would include the following sections:
This section is the last section you will write. This section provides an overview of the whole business plan, and quite frankly it is the only page some people will bother to read, so here is where you need to be very convincing!
Basically, it is a summary of all of the information you have included elsewhere in the plan, it offers the reader an overview of your business and what you are planning to do within a defined time frame. In this section of your plan you need to cover the important important aspects of your plan, and depending on the purpose of your plan, the items you cover will vary, but will generally include the following:
- Who you are and why you can make your business work
- What your business actually does
- Why you do it better or differently to your competitors
- Who your target customers are and why they will buy from you
- What you expect to achieve in the first year of operation, and
- Where you expect your business to be in five years.
This section of your business plan tells the reader who you are what your business actually does. It will include an outline of the industry and the origin story of the business.
The mission and vision for your business are at the core of this section, and you will also provide an overview of the industry, your market segment and your preferred clientele. You will also talk about what you and your key staff members bring to the business in terms of skills and expertise and how your team works together to achieve the business goals and objectives.
On this section you summarize the information you uncovered by completing your sales analysis for your business plan.
The sales analysis presents the 'sales related' results of your business analysis. In this section will list your major product or services with details of your estimation of future sales and a discussion of your major customers groups, who are they and how you can attract more. Consider using tables and graphs to present the information visually to support of the text. It will add interest to the page and make it easier for people who prefer visual presentation of important data.
This section of your business plan will summarize the information you collected while undertaking your market research and it will out line any conclusions you drew about the future operations of your business based on that information.
Small business market research involves looking at your customer base. You need to know about their behaviours, wants and needs and you need to look at the industry to see how your future competitors are currently serving the market.
You should look at the conditions in the market (and the wider economy), and attempt to forecast future trends and identify how your new business might fit within the market. What you are looking for is gaps. A section of the market that is not being served well at them moment. If you can identify the needs and wants of a group of consumers that are either not currently in the market (because no-one is meeting their needs) or who are unsatisfied with their current options, you are on the way to having a viable business model.
This section of your business plan will look at the work you have done identifying your competitors and your analysis about their response to your entry into the market place.
The level of competition in business can make a huge difference when it comes to the success or failure of a new business.
If you try to operate in a highly competitive market against strong established competitors you are going to have a very hard time staying in business!
An important part of analyzing the competition in business is developing a profile of your competitors that provides you with a comprehensive picture of the strengths and weaknesses of current and potential rivals in your industry.
If you can identify the strengths of your competitors, you can decide which strengths you can compete against and which strengths you should not even try to compete against. Any weaknesses you can identify are areas that you could work on and develop into strengths for your business.
SWOT Analysis involves gathering information on four areas of interest about your business (or your proposed business model) and the environment in which you are or plan to operate.
Two of the areas are internal to the business (strengths and weaknesses) and two are external (opportunities and threats).
In this section, you will outline the results of your analysis and talk about how your findings have influenced your planning (i.e. how you plan to take advantage of any internal strengths to capitalize on external opportunities, and how you plan to overcome external threats and address any internal weaknesses).
You should be able to demonstrate how the strategies you developed by addressing the results of your SWOT analysis are being actioned in the marketing, operational and financial plans you have developed for your business.
Your objectives are your goals for the business and regardless of which type of business plan format you go with, the section that outlines your business objectives is a must have section of your plan.
You don't need to do into any detail about how you will get there, more detailed information about the 'how' is provided in the detailed plans within your plan (marketing, operational and financial plan sections).
But you do need to provide the readers with a picture of what you want the business to be and where you intend to take it during the period covered by your plan, even if the only reader of the plan is you!
In this section of your business plan you will outline what they are. Generally, business objectives or goals focus on things like:
- Customer service
- Maintaining positive relationships with employee
- Establishing or promoting the Core Values of the business
- Any Ambitions for Growth of the business
In this section of your business plan, you will include a detailed plan on how you will reach your target market and then how you will convince them that what you have to offer is exactly what they want and need!
Important distinction between want and need - most people go looking for what they want rather than what they need, to sell a potential customer what they need you have to convince them that what they need is actually what they want - confusing I know but human beings don't always make sense...
You will talk about your products and services and how you will promote them. What features and benefits you will highlight and the methods you will use to market them. It might be direct marketing methods, advertising on social media or maybe paid advertising. This section will outline the methods you have chosen and offer the reader a rationale for choosing them.
Organization and Management
This section provides the reader with details about the way the business is structured and introduces the key people. It is not always necessary to include this information as a separate section in your business plan format, as you can include it in your background section.
But regardless of where you put it, you do need to cover this material.
The information about the organization and management of your business will cover the legal structure of the business and the ownership structure. It will also outline the skills and talents of the people in the management team and detail their respective areas of responsibility.
This section in your business plan format will also talk in general terms about the location of the business and where the primary market is and how the business intends to interact with their customer base.
Regardless of whether you choose a simple business plan format or a more detailed format, one of the important sections in your small business plan is going to be the financial plan, particularly during the startup phase.
Before anyone is prepared to invest in your business (including yourself...) or take the risk of lending you money, they are going to want to know whether or not you are going to be able to generate a return on their investment.
Family and friends might take your word for it, but your local bank manager will not. And the numbers you produce in your plan are going to have a basis in reality because believe me if they don't, any serious investor or financier is going to be able to recognise your financial fantasies for exactly what they are! At the very least you are going to need to develop a forecast of the likely profit or loss and a cash-flow forecast. And just in case you were wondering, yes you do need both.
Profit is important, without it the business will chew through any equity to keep the doors open until you get to the point where it there is nothing left. But every year thousands of very profitable small businesses are forced to close their doors simply because they are unable to generate enough cash to pay the bills!
The purpose of this section in a detailed business plan format is to provide a clear picture of how the work that is done within the business will enable it to achieve the organisation's strategic goals and objectives.
Like the Marketing plan and the financial plan, your operational plan is a detailed plan within a plan that focuses on one aspect of the business. This plan outlines how you will actually operate the business on a day to day basis.
It covers things like your production processes (if you have any), any staff you intend to hire and what how they will contribute to the production of the goods and services that the business is offering to their target market, and what you have put in place to take care of your customers needs.
Key Milestones and Responsibilities
Many first timers do not include this section in their business plan format as they do not understand how critical it can be.
The bottom line is that this section is where you work out how you will know that you have achieved your goals and objectives.
If you leave it out, you risk being in the situation where you think you are doing all the right things and you should be meeting your objectives, but you really can't tell if you are.
And let's face it, the first year or so in business you are going to be so busy just keeping your head above water, you are unlikely to revisit this part of your plan and without identifying your key milestones and a few KPIs (key performance indicators), you may find yourself flying blind.
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