Business Plan – Components of Business Plan

A business plan should be organised like a book, with the name or cover first, followed by an index. After these two pages, the main parts of the plan typically appear in this order: Executive Summary, Company Mission Statement, Goals and Objectives, Company Background Information, Organizational Issues, Marketing Plan, and Financial Plan.

Essential Components of a Business Plan

Effective business plans must contain several key components that cover various aspects of a company’s goals. The most significant parts of a business plan are:

1. Executive Summary

The executive summary should be at the start of the business plan, but it should be the last written part. Please describe the proposed business or any changes to the existing business and the industry it is (or will be) part of. Research results and recommendations should concisely summarise to give the reader the information necessary to make any decision. It also describes the company’s future direction, plans, or goals and the methods used to achieve these goals.

The summary should include adequate information on the company’s context to support the recommendations made. The final financial analysis and assumptions used are also part of the summary. In addition, the research must show how the proposed changes will ensure the sustainability of the current or proposed business. This section should also discuss any challenges facing the existing industry or the proposed company. Identifying these challenges shows the reader that all considerations have been explored and considered during the research process.

2. Description of the business

The following part of a business plan is the business description. This component describes your business and its objectives, products, services, and target customer base. You should also include details about the industry your business will serve, as well as trends and competitors in the industry. You should also have your and your team’s industry experience and what sets your company apart from the competition in your business description.

3. Mission, goals, and objectives

This section consists of three different parts. Start with a brief overview of the existing or planned company. Your mission statement follows this description. Where possible, limit the mission statement to three sentences and include only the key ideas about why the company exists. An example of a mission declaration for a produce farm might be: XYZ Farm’s mission is to provide fresh, healthy produce to our customers and a safe and enjoyable work environment for our employees. If you have more than three decrees, you should try to express them as concisely as possible.

The third (and last) part establishes the goals and objectives of the company. There are at least two schools of supposed goals and objectives. One school of thought asserts that goals are the means to achieve goals, and the other claims the exact opposite: that goals are the means to achieve goals. Either school you follow is a vital part of the business plan. These goals and objectives should show the reader what the company wants and the steps necessary to achieve the desired results. The goals or objectives must follow the acronym SMART, which stands for Specific (specific), Measurable (measurable), Attainable (attainable), Reasonable (reasonable), and Timed (programmed).

4. Market analysis and strategy

The goal of the market analysis and strategy component of a business plan is to research and identify a company’s primary target audience and where to find them. Factors to cover in this section include:

• Where your target market is geographically locate
• The top pain points your target customers experience
• The most salient needs of your target market and how your products or services can meet them
• The demographics of your target audience
• Where your target market spends most of its time, such as particular social media platforms and physical locations.

The goal of this section is to clearly define your target audience so that you can make strategic estimates about how your product or service will perform with this audience.

5. Finance

One of the essential parts of your business plan should contain the capital you need to start your business, its origin, and how it will cover. You must give the same importance to how you will pay the money you have to launch your new business as how you got it. Lack of planning about acquiring wealth for your business is one of the main reasons your business can fail. Whether you receive financing to run an e-commerce warehouse or a technology company, it is best always to keep your accounts clear.

6. Analysis of the competition

Your business plan should also contain a detailed competitive analysis, clearly outlining a comparison of your organisation with your competitors. Describe the strengths and weaknesses of your competitors and how you expect your company to compare to them. This section should also include any advantages your competition has in the marketplace and how you plan to differentiate your business. You should also include what makes your company different from other companies in the industry and potential problems you may face when entering the market.

7. Plan of marketing

An item not well known to those thinking of starting a business is customer acquisition costs. You must allocate resources to attract new customers and maintain those who have already consumed your product or service. It would help if you considered different choices to attract as many customers as possible, such as paid online search, sales agents, advertising, etc. Explains Decorah Sweeney, CEO of My Corporation. It is one of the items in your business plan in which you must be more strict since poor marketing planning for your business can cause investors to lose confidence in it.

8. Legal – the tax plan

Nobody wants legal problems, much less in a business. So the legal and tax program helps you ensure that your company considers all legal aspects, including regulatory procedures and tax obligations.

Of course, this varies depending on your business and activity. For example, a company selling gadgets might require a different name than one food sale. The latter possibly needs specific phytosanitary permits.

Ensure you cover aspects that have to do with permits, intellectual property, insurance, and administrative procedures.

9. Risk plan

What are all the aspects that could affect the operation of your business and compromise its continuity? The risk plan documents those threats and the steps an organisation must take to minimise them, on the one hand, or take recovery actions.

If you think this is insignificant, perhaps you should remember the story of a virus that emerged in a small region on the other side of the world and ended up paralysing entire production chains. The inputs did not arrive, and the companies did not produce.

In the end, there were product shortages in various industries. However, many of them would have had continuity options with an adequate risk plan, which is always necessary.

10. Schedule

Of course, every business idea needs an action plan to make it a reality. The function of the schedule is to establish the main activities, tasks, people in charge, and times in which they should happen.

Conclusion

The business plan will be the document that will open the doors to your business before potential investment partners or, of course, to new opportunities. So spend time doing this until you convince that you have something compelling and, if possible, surprising.