9 Critical Components to Creating Your Business Plan
When it comes to finding success for your business, the careful creation of your business plan is a crucial part of that journey. Your business plan is a living document that should project a three- to five-year plan and outline the blueprint for your organization to grow its revenue. Should your organization need to apply for a loan or microloan, it’s important to have an updated business plan and all of your financial documents ready for your application.
While every business plan will be unique, we’ve outlined below the necessary elements of any business plan. You can also find great resources online, like a business plan template from the Small Business Administration.
- Executive Summary: Your executive summary acts a snapshot of your business plan as a whole. The executive summary should explain your company profile and goals. This is one of the most important parts of your business plan and should tell your reader what your business is about, where you plan to take it in the future, and why your ideas for growth are good ideas for your business. While the executive summary appears first in the business plan, it’s often best to write it last, as you want to highlight the strengths of the plan you have for your business.
- Company Description: The company description of your business plan should read similarly to an extended elevator pitch. It should explain the nature of your business, which marketplace needs your business satisfies, and how your business has a competitive advantage that will bring value to your customers.
- Market Analysis: The market analysis section of your business plan includes knowledge of your target market, including its size and needs, along with projected market share and pricing structure. Additionally, your market analysis should include any potential regulatory restrictions your business may face, along with a thorough competitive analysis within the market.
- Organization and Management: Following the market analysis section, you’ll want to include a section on organization and management. For this, you’ll need to include your company’s organizational structure, ownership details, and information on your management team. Identify the team that has helped your business find success and will continue to be a part of that journey.
- Service or Product Line: What is it exactly that your organization does or sells? Here, you’ll want to explain what your service or product is, how it provides a benefit to current and potential clients, and why there is a need for your product or service.
- Marketing and Sales: For this section create and include an overall marketing strategy and a sales strategy. Your marketing strategy should include a market penetration strategy, a growth strategy, channels of distribution, and a communication plan. Your sales strategy should include the sales activities or tactics you plan to implement.
- Funding Request: If you are seeking funding for your business, this is where you outline your funding request. You should formally include your funding request, explain how that money will be used, describe any other anticipated funding requests over the next five years, and outline your overall financial plans for your organization.
- Financial Projections: If you are applying for funding and have included a funding request, you will also need a section with your financial projections, which should include your historical and prospective financial data, a short analysis of financial information, and a ratio and trend analysis for all of the financial statements included in your business plan.
- Appendix: Use the appendix option for your business only if you feel it is needed. The appendix can include additional financial data, letters of reference, product pictures, permits or patents, legal documents, contracts, and so on.
When compiling your business plan, it’s important to stay true to the identity and brand of your organization. What makes your company unique? How do you stand out? Determining what makes you and your organization special will make your business plan stronger, thus showing others why your organization will inevitably find its desired success.
When making your business plan, it’s important to know you’re not alone. At GROW, we offer numerous training programs and classes, along with one-on-one business counseling, to help you build your business plan and get the necessary financial documents in order.