Starting a business is not as easy as you think. In reality, the road to a successful business is filled with many obstacles and hurdles that can take your success away.
However, one particular thing comes along that acts as a guide or a roadmap for your business path, namely - a business plan.
A business plan is like the heartbeat of your business that brings your business idea to life.
But how can you create a good business plan? First, you need to know what are the key components of a successful business plan.
Let’s explore the 10 key elements of a successful business plan.
Key components of a successful business plan
1. Executive summary
If you ask us about one business plan component that is the most important, we would say it is the executive summary.
The executive summary is the first component that is included in your plan. It is important as it tells your readers (aka investors) what your business is, in a nutshell.
You can also think of it as a snapshot of your business that right away tells the reader what your business is, what are its goals, and how it is planning to achieve them.
It highlights and summarizes all the key points of your business such as your business idea and its feasibility, mission, and vision, what your product is, who your audience is, your financial plan, etc.
2. Company description
This section is all about giving your investors a view or a description of your company.
Your investors and other readers need to know what your company is before taking any step and that's why this is an important component of your business plan.
In this, you need to write about all the basic things about your business such as your company name, who your team is, what skills and qualifications they possess, your business location, legal structure, and your goals.
Also include information about the industry your company works in, the size of the industry, current trends, target market, competitors, etc.
3. Market analysis
This section is all about your market research.
The first step in this is to thoroughly analyze your target audience and define who they are and what their interests are. This will allow you to record the demographics of your target segment such as age groups and categories.
You will also need to predict how much demand your product will create in the market and how it will affect your business.
It doesn’t end here - then, try to visit your competitors and collect as much information about them as possible. This includes their strategies, revenues, and more.
Finally, give a complete picture of your business. Explain what is happening now, what the future holds, what things are like now, and so on.
4. Competition analysis
Now it's time to take the basic competitive analysis you made in the previous section to the next level. This section is all about you vs your competitors.
Began by making an analysis and writing down the strengths and weaknesses of your competitors and how they look in comparison to yours.
Talk about all the areas where your competitors get an upper hand and are better than you, and how you plan to overtake them.
Lastly, explain how your business is different from your competitors and what are some special things that make you better than them.
5. Products or services
This business plan component is all about explaining what you are offering. Here you need to expand the information you provided about your product or service in the executive summary.
You can start by telling your investors what your product or service is. Just tell them what it is, in a nutshell. Along with that, also write about the unique benefits and features of your offerings.
This must be achieved by carefully understanding who your customers are and what exactly they need. Then you can modify your offerings and tell your investors and your product or service can stand out.
Finally, tell them how you plan to achieve your sales goals and what modifications you are planning to make in the future.
6. Marketing and sales
Your product or service won't go anywhere if it never gets high sales. And how will it achieve high sales? With strong marketing! This clearly shows us how important a marketing and sales strategy is for your business.
First of all, start with anticipating the amount of sales you're gonna make and the marketing strategies you would use to achieve them.
Then, learn what is something that your product or service gives that the competitors can't, and make it your major focus.
Understand your customers, set an affordable yet profitable pricing structure, and develop strategies on how you are going to get in front of your audience and also retain them after purchase.
7. Management team
This component is all about talking about your management team, the leadership skills they possess, and how they can change the future.
Tell investors who the leaders are and how they run the team. Communicate their core knowledge and skills to make an impact. Give them your management team's complete bio.
Also, you can talk about the legal structure of your business. Tell them what kind of legal system your business follows. Whether it’s a partnership, a sole proprietorship, or any other ownership structure.
8. Operations plan
Next, you need to outline how your business plans to operate. This is all about writing what your day-to-day activities are going to be, how will it take place, etc.
Before you make an operation plan, just get a proper understanding of how your business is going to work. In other words, try to understand the business model. This will help you understand the basic operational needs of your business.
Then, outline everything that is needed such as the number of employees you need to hire in each department, the types of equipment needed, the amount of inventory you'll store, and the facilities needed.
In the end, choose who your suppliers are going to be and how your product process takes place.
9. Financial projections and needs
Here, you'll be making proper financial projections for your business as well as anticipating your funding requirements.
You can start by estimating your future revenue and expenses with the help of your balance sheet, income statement, cash flow statement, etc. By this, you'll be able to understand where your business stands financially.
Along with that, consider any unplanned changes that your business can face in the future and make your plan accordingly.
Finally, after making an estimation of your expenses related to starting and running your business, you can properly plan how much funding you need and where you'll be using the money.
An appendix is a section you can add at the end of your business plan to support the information you included in your business plan.
Here you need to add all the supporting documents such as resumes, financial statements, patents, product images, legal documents, and any other relevant documents.
Add all the relevant documents and organize each one with headings.
What is the key to a successful business plan?
Now, when thinking about the one thing that makes a business plan successful, then it's research. With proper and relevant research you can prepare all the major sections of your business plan effectively.
What are the 3 A's in a business?
The 3 A's in a business stands for Accountability, Awareness, and Authenticity.