9 Basic Components Of A Great Business Plan
By Jennifer S. Croft
A business plan doesn’t have to include fancy charts or perfect sentences to be effective. It can be as simple as something drawn up on the back of a cocktail napkin or as complex as a 100-page document.
In either case, the business plan should contain the following nine basic components.
1 ) A brief description of the business, the industry, and trends within the industry
You don’t have to conduct hundreds of hours of research to come up this. Simply focus on what your business does, what industry it operates in, and what the major trends are within that industry that could positively or negatively impact your business.
2 ) A mission statement
Short and sweet, this should include something about your top products or services, the people or businesses you’re targeting, and the primary goals and values of your business. Here’s an example for an upscale hair salon: At Hair Affair, we offer beautiful hair care and styles for those who work or live downtown. When creating a new look or enhancing a familiar one, we are committed to building clients’ self-confidence and ensuring their satisfaction.
3 ) A bio of the owners, advisors, managers, and/or investors in the company
Don’t go crazy here. Just include the names of the key players and a sentence or two about their skills and management experience. Later on, if need be, you can attach résumés to the business plan.
4 ) A brief description of the day-to-day operations of the company
Describe how work will flow in and out of your business. If applicable,
describe the key vendors/suppliers you’ll rely on, the products and supplies you’ll purchase from them, and the payment terms you’ll set up with them and your customers or clients.
5 ) Start-up costs
Show how much it will take to get the business off the ground and to reach breakeven. Don’t merely quote a big number, break it down into smaller categories of expenses, and detail how you’ll come up with that money. Download our free start-up cost worksheet that takes you through typical start-up costs, item by item.
6 ) Cash flow
Include a simple spreadsheet that shows how money will flow in and out of your business. Project out at least one to three years (any further, and the figures tend to be wild guesses). For an easy-to-use cash flow worksheet, download our free form.
7 ) A brief description of what makes your product or service unique
Describe what makes your business stand out in the marketplace. Demonstrate what you offer that differentiates your product or service from the competition.
8 ) An analysis of competitors
Include a short blurb on your top direct competitors, outline their strengths and weaknesses and show how you stack up against them.
9 ) Marketing plan and strategy
Sketch out the price points you’ve chosen, the types of marketing you’ll use to connect with potential customers and clients, and your overall strategy for bringing in and retaining business. Be as specific as you can here.
That’s it! Those are the nine points you need to cover to craft a dynamite business plan.
Whether you’re starting a business, purchasing a business, or expanding a business, the moment you start to plan, you begin to put structure and form to your ideas and dreams. Don’t wait to write a plan until a lender, investor or key partner asks for one. Do it today…do it for yourself!