What is a business plan?
A business plan is a detailed document that covers all possible aspects of our business like products, pricing, marketing plans, revenue projections, competition and other details. This document is in other words a guide for business execution.
Why do you need a Business Plan ?
You need business plan :
- To be clear in your head about your startup
- Have plan of action chalked down for smooth execution of each aspect of business
- Have alignment among all stakeholders about execution plan
- Have a ready to share document in case you need to pitch for investment
Key elements of the business plan
- Executive summary
Executive summary is the first and most critical section of the business plan. Its objective is to give summary of the business in terms of business idea, revenue model, target market and marketing strategy. This section must be a summary which means it should be not more than one page. At max you can stretch it to one and half pages.Executive summary is the most critical part of the business plan since this will either develop interest of the reader (usually targeted at the investor) or it will make them lose interest. So it must be thoroughly revised and rewritten multiple times until it is an ultimate piece of perfection. Other than helping the busy investor to get the crux of your plan, it’s another objective is to give clarity to the writers themselves. While writing things in detail, we sometimes get lost. Executive summary ensures that we know what we are doing and it’s simple to communicate with minimum words.
- Business Description
The business description generally starts with a short description of the business. While portraying the industry, examine the present dynamics and also the future potential outcomes. You ought to likewise give data on all the different competitive industries, including any new products or improvements that will profit or unfavorably influence your business.
- Target Market Analysis
You must answer the following questions while analyzing the target market.
- What are the demographics(age, gender, location etc) of customers who will use your product
- What is their life style
- How many are they to define size of target market
- Products and services
This section details about the product or service that the business is offering. How does it work? What are the features other than the core product itself. If you are offering a service then what are the additional value added services being offered. Here, you must analyse the competition. You must highlight and understand what different you are going to offer to differentiate from the competition.
You can have one competition or you can have many. You must analyze all of them or at least major ones.
- Sales and marketing
How are you going to promote your business? What marketing channels will you use? What sales channels will you use for this purpose? How will you sell the product? What do you need to set up the sales channel?
- Financial Projections
This section contains your cash flows and income explanation, balance sheets, 5 year contingency plan, break even analysis and other money related analysis. This part may require assistance from a financial expert and a spreadsheet program.
- Marketing Strategy
In this section, you mention how do you plan to market your products. How will you position it versus competition. What features will you highlight. What & how will you communicate it to your customers.
A very important part of the plan. This should talk about the organizational structure, team members, their experience, and role in the startup. Since start-up is obviously new, this will not have details like medium or big size businesses. However, it should be well thought and must give confidence to the investor in your management.