So, you decided to set up a business and now, it’s time to write your business plan. But where to start? What do you need? To answer these qestions in your mind, you need to know the parts, components of a business plan. Knowing the components of a business plan will give you guidance and keep you on track during writing your business plan. So, let’s have a look at the parts (in other words, components) of a business plan and define each part in detail. Click here to Access free resources for your business plan.
Click here to Access free resources for your business plan.
Part -1: Executive Summary
The executive summary is the opening section of your business plan. It is a summary and overview your entire business plan, expressing the vision and promise of your business, its goals, and its strategy. An executibe summary is the last written part of a business plan. So, write it after you finish every other part of your business plan.
Key components of an executive summary can include:
Business Name:
The official name of your business.
Business Type and Ownership:
Write the legal type of your business (LLC, C-Corpetc.) Write the owners and their percantage of shares in the business. Also indicate the location of your business.
Business Description:
Describe what your business does, define the problem it solves, and summarize the market needs it addresses. It’s the “elevator pitch” for your entire business.
Founding Team:
A short summary of founders’ backgrounds and relation with the business. Keep this 1-2 sentences short, you will give details in Management & Organization section later.
Industry Information and Market Opportunity:
Provide a short information about the insdustry you are in (is it growing, is it shrinking, what is th CAGR, etc.) and your startup’s opportunity in going into this industry.
Business Model:
A brief description of how your business will make money.
Vision & Mission
Clearly state the vision and mission of your business. This gives readers a sense of the company’s direction and its core values.
Funding Needs:
Provide a short information about how much Money you need, in which form (equity, debt, loan, etc.) and provide information about the use of funds; why are you asking this Money?
Part-2: Company Description
Legal Structure
Explain whether your business is a sole proprietorship, partnership, corporation, or LLC.
Business History:
If you are not just starting up, summarize your business’ history shortly, discussing significant milestones and achievements.
Location & Facilities
Describe the location of your business, if you have or will have any facialities, give details about them.
Business Objectives:
Your business will have short-term and long-term goals for sure. Here is the best part to write them. For e.g. in short term, you can aim to be a profitable venture in your area. As a long term goal, you can aim to expand your business to more attractive areas.
Problem Statement:
Stare the problem you’re solving.
Solution:
Clearly describe how your product or service solves the problem. This is the reason your business exists.
Target Market:
Who you are aiming to sell your products or services. These are your target customers and the blood cells of your business.
Part-3: Market Analysis
Industry Overview:
Give a brief overview of your business industry do not forget to include current trends, challenges, and outlook about your industry for the upcoming years.
Target Market:
Define the specific customers your business aims to serve. Give information about their demographics, psychographics, and buying behaviors.
Competitors:
Identify your main competitors and analyze their strengths and weaknesses. This helps in positioning your business strategically in the market.
SWOT Analysis:
Here is a good place to make your SWOT analysis if you would like to include it into your business plan.
Part-4: Marketing and Sales Strategy
Marketing Strategy
Detail how you intend to reach your target audience. This includes advertising, PR, content marketing, social media, and more.
Sales Strategy
Discuss how you plan to convert leads into paying customers. This includes your sales funnel, pricing strategy, and sales team structure.
Part-5: Products or Services
Provide a detailed description of your product or service, highlighting features, benefits, prices, costs and what sets it apart from competitors.
If applicable, discuss the lifecycle of your product or any research and development activities.
Part-6: Management & Organization
Organizational Structure
Ilustrate the structure of your business, identifying key roles and their responsibilities.
Management Team
Introduce your management team, providing a brief background of each member and their relevance to the business.
Personnel Plan
Include an overview of the personnel list, how many employees you will employ, what are their costs, etc.
Part-7: Financial Projections
Startup Costs
For new businesses, provide a list of the initial costs required to start the business, including equipment, inventory, and licensing.
Revenue & Profit Forecasts
Provide a projection of your revenue and profit for the next three to five years, with a clear explanation of your assumptions.
Cash Flow Statement
This is a snapshot of your business’s cash inflows and outflows over a period, giving an insight into its financial health.
Part-8: Funding Request
If you’re seeking external funding, detail the amount of funding required, its purpose, and the type of funding you’re seeking (e.g., equity, loan).
Part-9: Appendix
Provide the necessary documents such as proforma financial tables, projections, assumptions, location maps, charts, graphs, images, cv’s of founders, etc.
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