business plan template

business plan template

Importance of a Business Plan

1. Introduction

Getting prepared to create a business plan is an in-depth process that requires focused and specific planning. While the results of a business plan come out the other end, the planning process itself and the lessons learned can provide a great benefit to your company. Most importantly, even if you have no intention of obtaining a loan, a business plan can greatly improve the chances for the success of your small business. With it, you will be able to forecast possible problems that could occur during the life of your company, adapt contingencies, and additional plans for the future. It will help you to start out on the right foot, stay focused, answer questions about your project more clearly, and save you time. Whether or not you are looking for an investor or a loan to start your company, a business plan is essential. Take it from me, the guy with the MBA, a proper business plan will always come in handy.

2. Executive Summary

After identifying your market opportunity, the next step is to capitalize on it. This is a simple but convincing explanation of how you will complete your task to win the majority of the market share. Back this up with financial projections, this will aid in gauging the feasibility of your plan, showing the amount of revenue required to break-even and make a profit, and deciding whether or not this has the potential to provide the necessary ROI. This will help to provide a solid understanding of where you want to take your business.

4. Strategy and Implementation

This is the heart of the plan. This is where you describe in depth the problem you are trying to solve, the size of the problem, its urgency, and your solution. Make sure to back everything up with good research. Know your customers and how they will adopt your solution. Also, get a good understanding of your competition and what it will take to actually turn people away from them to your solution. The more thorough and thoughtful your research, the more compelling your case will be to investors.

3. The Market Opportunity

The executive summary should briefly explain the market opportunity, the strategy, the feasibility, and the exit strategy. Take the most important parts of each of the detailed sections and at the very least, touch on each. This should be about 5 pages long and easiest to start by writing a paragraph for each. If it ends up being 5 paragraphs long, then it can simply be put into that format.

The executive summary is arguably the most important section of the business plan. It must be concise, specific, and well-written. It is also the most important section of your plan because it is the first and sometimes the only section that may be read. It has to provide the reader with a clear understanding of the highlights of the entire plan and must sell your business.

3. Market Analysis

A market analysis forces the business owner to become familiar with all aspects of the market so that the target market can be defined and the company can be positioned in order to garner its share of sales. The purpose of the market analysis is to ensure that the company is well positioned to take advantage of opportunities and may also unearth potential pitfalls that may be lying in wait. This is where good information is vital. Making assumptions or being overly optimistic can damage the business. By conducting a thorough market analysis, business owners can avoid this. A good market analysis will avoid costly mistakes, such as introducing a product with no market or launching it in a market that is oversaturated. Identifying and researching the target market enables the firm to take realistic steps to position the company for success.

4. Business Strategy

Business strategy can be defined as a strong strategic plan that is used by management of the organization to set a defining objective. It can also be defined as an art and science of formulation, implementation, and evaluation cross-functional decisions that will enable the organization to achieve its long-term objectives. There are few major types of business strategy: growth strategy, generic strategy, competitive strategy, focus strategy, globalization strategy, and e-strategy. In developing the overall company strategy, the role of marketing has become more pronounced. The reason for these more focused types is that each will directly affect the level of growth, the direction, the manner of competition, and the resource allocation within decisions that will be made within their respective areas. Marketing strategies are effective when upper management sets a clear direction for the organization. This should give direction and rationale behind the objective and creating a criteria of evaluation to judge the success of the strategies as well as creating a feedback loop for learning and future strategy development. With clear objectives, functional strategies and programs can be developed to support the organization-wide business strategies. These are the strategies developed by units within the company that will emphasize a specific process and competitive part of the company’s business. These strategies are to be taken in SBU, product, or market that will ensure success will bring success to the overall company strategy. A major role of company strategy is to allocate resources so that the company may reach its objectives. This is going to be critical to marketing strategy and programs. Resource decisions are often the most critical as they bring a high level of risk and at the same time a need for immediate results through the above-cited direction of the strategy and its implementation. If the company has not always been successful, it should evaluate its strategies and try to learn why it has failed or had minimal success. This learning will be a trial and error process which can test the validity of the strategy and its effect, which can then lead to redevelopment or change of strategy. In a market defined by increased levels of competition and change, companies are realizing that success often depends on how prepared they are for a change rather than the actual strategy itself. This has brought a decrease in the use of long-term plans and an increased level of short-term planning and functional flexibility. An ongoing tracker that monitors the marketing environment and the progress of the strategy and its implementation will also have more frequent strategy reviews, often considering change and a low cost of exit strategy if it is considered a failure. This may lead to discontinuation of the strategy and re-evaluation of the new at a later date.

5. Financial Projections

Financial projections are either compiled on a quarterly or annual basis. It’s always best to be conservative. Investors could be critical if you don’t reach your sales and revenue projections for the first year. If the first year proves to be successful, you can then project the next year using the first year’s financials as a guideline. A best case, worst case, and most likely case scenario should be utilized when projecting. This will provide three sets of projections. A worst case scenario will allow you to prepare for the unexpected, and will show potential investors that you are planning for any and everything. This is what they call a contingency plan. A line graph is the best means of displaying the revenue and expenses. A visual of the “slope of the line” will indicate whether your projections are reasonable. If the line is pointing up too sharply, it may be unrealistic. High revenue and low expenses are the most favorable. Since many business plan readers look only at the executive summary, it is imperative that the executive summary is not just a summary, but an involving opening statement. Make sure to overview the financial projections in a couple of sentences, indicating whether they are at a net gain or loss. This will immediately spark the interest of the reader to investigate further into the financials.

Financial projections are a central part of a business plan. Projecting revenue and expenses can be tricky, but it is an essential part of positioning any company to succeed. Well thought out projections will provide a tool for making good business decisions, and they will show that you understand your business. You should thoroughly explain and justify your projections. This is done by using information about your business, the economy, and the industry in which you’re involved.