Everything You Need to Know About a Business Plan
Nov 23, 2020
Whether you are an entrepreneur in the early stages of business or have been owning and operating a business for 20 years, you’ve probably heard of something called a business plan.
A business plan is one of the most critical documents your business will have for both the management and growth of your business. But what exactly is a business plan? Why is it so important? And how do you even go about starting one if you do not have one already? We would like to help you answer these important questions and guide you through the process of creating (or revising) a plan to help your business’ longevity and growth.
What is a business plan?
A business plan is a document that breaks down the fundamentals and basic components of your business, laying out how your business is going to work and what will be done in order for it to succeed. It outlines your business’ short and long-term goals in a practical way and forces you to think about each aspect of your business with intention. Whether you are a start-up business or have been in business for years, it is important to have, maintain, and update a business plan as your business forms and develops.
Why is a business plan so important?
Think of a business plan as the very foundation upon which your entire business is built. Without a sturdy and well-thought foundation, your business will crumble. Because a business plan focuses on both short and long-term goals and covers and various components of a business, you are laying out the guidelines and plans for how your business can start, survive, and move forward. If you are a start-up, it’s important to think and map out your business with a business plan so you can cover all your bases. If you are an existing business, you should maintain and update your business plan often as your business develops, adapts, and grows with the market.
Where does a business plan consist of?
A formal business plan is made up of several different components that cover all major aspects of business operations. The list may seem overwhelming at first, but as you start to dive into each topic, you will soon realize that many of them are integrated throughout your business. While there are many different formats that a business plan can have, here is a checklist of some of the key elements you will want to include:
- Executive Summary - a 150-200 word snapshot of your entire business plan (typically written last)
- What does your business do and why it will be successful?
- Basic information such as location, products/services offered, leadership/employees, and your mission/vision statements.
- If planning to ask for financing - highlight some of your financial information
- Company Overview (a.k.a Company Description) – explains the basic fundamentals of your business
- What is the story behind your business and what problem(s) does your business aim to solve?
- Advantages over competitors
- Mission statement, vision statement, and core values
- Any other strengths your business has (good location, equipment, etc.)
- Target Analysis – describes who you will be selling to and why it will benefit them
- Target market (demographics, spending habits, and current trends)
- Competitor analysis – outline strengths and weaknesses of both direct and indirect competitors
- Business Structure – outlines how your business will be structured and organized
- Management - who will run and manage the various aspects of the business?
- Legal structure (sole proprietorship, partnership, C or S corporation, etc.)
- Organizational map/hierarchy
- Product or Service Line – describes what your business will be offering and why it will help your customers
- Outline of the lifecycle of your product/service.
- Intellectual property (copyrights/patents)
- Research and development – what trends and developments may lead to future products/services?
- Sales & Marketing – outlines your strategy to advertise and sell your product/service
- May change many times throughout your business’ lifetime.
- What are you going to do in order to promote and make sales for your business?
- Advertising mediums – traditional, digital, or mixed?
- Pricing policy, including any promotional sales and/or loyalty rewards?
- Sales and marketing team
- Marketing budget.
- Financial Plan & Projections – helps ensure that the plan you have for your business will make a profit.
- 1, 5, and 10-year cash flow projections
- Historical financial data from your industry (or your business if it is already existing)
- Ratio trend analysis.
This list may seem a little long at first, but once you get started, it will start to flow, and you will begin to see the real value and importance of your business plan. If you still have questions, there are many free resources available for you throughout the state that can provide insight, look it over, and help you refine it to the best it can be.
- ND Women’s Business Center – Assists current & potential business owners with training, technology, leadership, & development
- ND Small Business Development Center – Assists small businesses with business plans & financial projections
- SCORE – Retired business owners volunteer to mentor and counsel small business owners
- ND VBOC - Assists service members, veterans, & military spouses looking to start, purchase, or grow a business
Ready to start developing and refining your business plan? Visit the SBA website to find more information and download a template to begin laying the foundations for your business’ success.