A well-developed business plan is critical for any start-up business. To develop a thorough business plan, research your customers and competition; avoid mistakes that lead to business failure; and know how to implement a business plan and make it work. Your business plan should include a basic financial statement, all major pieces of a business plan, and information from your business-planning checklist.
A business plan is a detailed blueprint used to identify a company's goals and to explain how a company will achieve financial success. Lenders, venture capitalists, or prospective partners who will consider investing in your company will want to know how the business intends to spend its money.
A business plan demonstrates how the money will be used and what type of financial compensation the investor can expect in return. A solid plan provides strong support for a loan request. In addition, a business owner can use the business plan to establish tangible goals for the company and its managers. New managers can also benefit by learning where the company is headed in the next two to five years.
The following points should be included in a business plan:
• An Executive Summary explains the business idea and creates a snapshot of the company's mission and how it will deliver products or services to its customers.
• The Business Description anticipates and provides answer to critical questions regarding the business, product/service, marketing, and also provides an analysis of your target customer.
• The Marketing data describes what kind of product the company will provide and explains how the product is different from that of the competition. A comprehensive plan looks at four essential marketing tools; product, price, place (business location), and promotions.
• Another component to your business plan is the Operation Plan of your company. This is a comprehensive assessment of your company's operations or manufacturing production. Describe your company's goals and strategies. Assess your company's advantages such as use of new equipment, different stages of production, inventory control or cost effective methods of production. Another important aspect to your business plan may include an effective E-commerce plan and how you plan to attract customers.
• Management introduces key managers, their relevant work experience and how these positions contribute to the success of the company. Managers with industry experience will likely be familiar with the risks and challenges of a new business.
• The Financial Plan, as the name implies, provides a detailed financial plan for profit and loss forecasts, and will forecast 24 months into the future. Your balance sheet should include your company's total assets, liabilities, and total net worth. The total assets should be equivalent to the total liabilities plus total net worth. A summary of key ratios should also be used to measure financial benchmarks of success.