For Part 2 we are going to a discuss a high-level overview of the written document for your Business Plan.
The Business Plan
The actual document that you prepare traditionally consists of seven key components plus a cover, title page and table of contents:
- The Executive Summary
- Business Description
- Market Strategies
- Competitive Analysis
- Design and Development plan
- Operations and management plan
- Financial Plan
Download the Business Plan Process – Infographic (pdf).
The first step in building your business plan document starts with section 2, actually skipping over Section 1, for now. The Executive Summary is generally a one-page overview of your entire Business Plan that acts as an elevator pitch or a quick review to investors or bankers to determine whether the business interests them from the beginning. This is created once you have researched and written your entire plan, to make sure everything works out conceptually first.
This makes Section 2, the Business Description, the essential first step to start your plan and will become the foundational statement that leads to everything else. This is functionally a way to get your ideas down on paper and work out what your business looks like from the start. To begin this section you would start working on a rough questionnaire document about building your business plan. In future articles we will be offering a complete walkthrough along with a template for you to work from to answer these questions. Through these questions you will be able to walk through a rough version of Sections 2 to 6 in determining all the answers to the tough questions you will need to consider when creating your business and the plan.
In Section 3 you will need to create a written document that is critical for planning the viability of your business by studying the market. You will answer questions about your market potential, who will be your customers and who will be your competitors? This will also require you to describe your market and prove that you understand the demographics that your business is targeting. All of these elements develop credibility in your business and that you understand what your business looks like.
A Competitive Analysis makes up Section 4 where you will perform an industry analysis to understand yours and your competitions strengths, weaknesses, opportunities, and threats that exist to create a well-rounded understanding of the competitive landscape. You will examine the business environment, product sourcing and even what the pricing will look like for your business. All of these elements must be determined for your plan to make sense and prove that it is economically viable.
Section 5 allows you to formulate a Design and Development Plan to understand how your sales and distribution will take place along with developing a marketing plan to understand how your product will be sold and what techniques you have planned for promotion.
Determining an Operations Plan for Section 6 allows you to discover what your business is and how it will run. This means finding a location, if you are building from scratch or renting, and how it will all be laid out. You will also be discovering how many employees you will need, wage structures and who your key personnel will be. Finally, it will help you understand every asset that you have and will need as well as where you might run into trouble in the future.
The Total Business Plan length can run anywhere from a few pages to almost one hundred depending on the purpose of the proposal you are creating. If you are creating a new kind of business, it may take a lot of explanation, but on average a good business plan runs between eighteen to thirty pages. It really depends on the purpose of your plan. If you are introducing a several million-dollar venture, you may want to include a lot of information to truly explain why investors, or the bank ‘must’ buy in. The fact is that the same could be said for your start-up because without a lot of credit, you may need to do some convincing to get your financing in place. That is what the business plan is for.
Join us in Part 3 as we begin discussing Section 7, the financial portion of your business plan.