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Components of an Effective Business Plan

A business plan is an important planning tool, and it provides a solid foundation for building a successful business. Your business plan is a "living" document that should continually evolve to reflect the changes and growth of your business.⁣

⁣Whether you're preparing to launch a new business or you've owned one for years, there’s never a bad time to craft a "well structured" business plan.⁣

Serving as a road map for the next three to five years of your business, your business plan should include the following essential elements:⁣

1. Executive Summary:⁣

Although it’s typically the first element of a business plan, the executive summary is written last. Your one-page executive summary should include:⁣

• Your mission statement⁣

• When your business was founded⁣

• Who founded the business⁣

• A description of your products or services⁣

• A summary of how you want your business to grow⁣

• Highlights of your growth (if you've already been in business)⁣


2. Company Description:⁣

This is where you describe what your business does, how it satisfies a need in the marketplace and the specific types of customers you serve. Make sure to mention any competitive advantage that differentiates you from your competitors.⁣


3. Market Analysis:⁣

This is where you determine what share of your market you can capture by providing details about your target market (size, demographics, needs, purchasing trends etc.)⁣


4. Competitive Analysis:⁣

This is where you formulate a strategy to stand out from the crowd.⁣

• What are your competitors strengths and weaknesses?⁣

• What are they trying to achieve?⁣

• How do they market their business?⁣

• What barriers must you overcome to compete?⁣

• What opportunities can you take advantage of to bypass these barriers?⁣

Your competitive analysis is a by product of your answers to these questions.⁣


5. Management and Operations:⁣

Here, you write a detailed description of who does what in your business and provide background information for key players.⁣

It should include:⁣

• Your organizational structure⁣

• Ownership information⁣

• Profiles of your management team (if applicable)⁣

• Number of employees (if applicable)⁣


6. Marketing and Sales:⁣

This is where you find and create customers by defining your marketing and sales strategy.⁣

When working on this section, ask yourself:⁣

⁣• How and where do we plan to share our messaging?⁣

• Who will handle sales?⁣

• If necessary, how will we train someone to handle sales?⁣

• What tactics are we going to use to identify, attract and convert leads?⁣


7. Financial Summary:⁣

Last but not least, finish your business plan with information about your businesses financial health and future.⁣

In this section, be sure to include:⁣

⁣• Your income statements⁣

• Cash flow reports⁣

• Balance sheets⁣

If you're seeking FUNDING, your "Financial Summary" is critical and must be as current, accurate, and detailed as possible.⁣

What else should go into a good business plan? Comment below!

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