5 Essential Contents Of Business Plans

There is no fixed  content for a business plan. Rather, the content and format of the business plan is determined by the goals of the entrepreneur and the intended audience. For example, the business plan developed to guide ones journey in the business world (self-directed) is somewhat different from the plan required by banks or other financiers.  Regardless, a business plan should contain reasonable information needed to decide whether or not to pursue the business idea. Nevertheless, common factors in business plans include:

1. Executive summary The executive summary summarizes the key points of the business plan. It defines decision to be made and the reasons for approval. It involves:

• Description of Business
• Product Summary
• Business strategy
• Financial Summary

For a new venture, the executive summary might contain:

• Company information: name of company, proposed legal structure, current legal structure, minority and majority investors.
• Amount of investment required
• Expected terminal value
• Description of market opportunity
• Justified reasons that the market opportunity can be exploited

2. Marketing & Sales  Describe the business idea, how it will be marketed and sold. This section states for example the identified needs, customers, products or services to satisfy the needs, how to reach the customers, etc. It contains:

• SWOT Analysis
• Competitive Analysis
• Target Customer Groups and Market Dynamics
• Customer Demographics
• Sales Strategy
• Pricing and Positioning
• In-depth Marketing Plan
• Advertising and Promotion
• Market Trends
• Market Estimates

3. Business Structure

• Company Ownership
• Management Team
• Business Location
• Business Organization

4. Objectives & Plans

• Business Vision and Mission
• Next 12 Month's Action Plans
• Resource & Budget Allocation

5. The Financial Plans

• Staffing and Employees
• Start-up Budget
• Forecast Profit & Loss Account
• Forecast Balance Sheet
• Forecast Cash flow
• Sales & Profit Forecasts
• Sales Charts & Graphs

Have a nice day.

4 Reasons For The Failure Of Business Plans

Robust business plan is essential to raise finance and maximize profits. However, some business plans do not get implemented due to common errors business owners make when completing the business plan and during execution. They include:

i)                   Incomplete financials This is perhaps the most important section of any business plan. Lenders want to know when they will have their loans repaid and assess the risk. You need to produce financial statements that accountants will endorse without dithering.

ii)                 Over ambitious projections Everyone thinks his/her business will grow exponentially in the first 12 months but in reality this is rarely the case. Business plan must show a realistic path to profitability that proves  actual revenues and profits.

iii)              Leaving crucial element out Strategic part of the business is mainly the focus of most failing business plans, ignoring the systems (policies and procedures), structure, skills (capabilities of the people in the organization), culture (norms, values, beliefs and assumptions) and budget.  There is the need to ensure that all essential elements are correctly written in the right area of the plan and are properly aligned for the business to successfully operate.

iv)              Poor understanding of marketing Communicating products to  prospects is a critical success factor for every business owner. Business plan therefore, must show that target customers are well known, their needs fully understood, justified reason why they will buy from the business and how the business will communicate with them. Also, the likely actions and reaction of the competitors should be anticipated and planned for. Get more updates. Subscribe here.