Business plan How to write one correctly?
After realizing the importance of a business plan, it is time to draft one. To help you in preparing your plan, we will outline the seven main sections of a business plan and which information should be included or disregarded, in addition to additional figures and resources that you can use.
1) Executive Summary
This summary is a very important element of your comprehensive business plan. It follows the title page and should include a summary of the information you want to deliver to whoever is reading your business plan. Most entrepreneurs include the summary in the eighth page of the business plan.
Be creative when writing the executive summary of your business, and clearly state what you want to deliver in this summary.
2) Business Description
This section usually begins with a brief description of your business sector.
In this description, you should discuss the current and future prospects for your industry and provide information about the different markets, including any new products or developments that would benefit or negatively affect your business.
3) Market Strategies
A careful analysis of the market is included in this section of the business plan. This analysis provides entrepreneurs with a great opportunity to learn about all aspects of the market. This will help entrepreneurs determine their target market, and position the company to earn its share of sales and profits.
4) Competitive Analysis
The main objective of this analysis is to identify the strengths and weaknesses of competitors in the market. This analysis provides the most important strategies in this regard, and the barriers that can be developed and adopted, to prevent the competition from entering your market. This analysis also identifies the other weaknesses of competitors, so you can take advantage of such weakness in your product development cycle.
5) Design and Development Plan
This part of the business plan is aimed at providing investors with a thorough description of the product design, identifying its development methods in the context of the production and marketing process, and establishing a development budget that allows the company to achieve its long-term goals.
6) Management and Operations Plan
This section aims at providing a detailed description of how business functions are undertaken on an ongoing basis. This plan highlights the logistics of the organization, such as the different responsibilities of the management team, the tasks assigned to each department within the company, as well as the capital requirements and expenses related to the operations of the business.
7) Financial Statements
Financial statements always come at the end of a business plan, but this does not imply that they are less important than preceding sections such as the business concept and management team.
The financial statements of a business plan are divided into:
- Historical financial statements: These include statements of the company’s income, balance sheet, cash flow statement for each year you spent in business (usually between 3-5 years), and any collaterals you can provide to secure a loan, regardless of the business phase you reached.
- Projected financial statements: All businesses, whether in their early or growth stages, need projected financial statements. Most often, financiers need to know what your business is expected to deliver within the next five years. Hence, the documents should include on annual basis the projected financial statements of the company’s income, balance sheet and cash flows as well as capital expenditure budgets.
For the first year, you should provide monthly or quarterly forecasts. From the second year to the fifth year, you can provide quarterly or annual forecasts. You should also make sure that your forecasts are consistent with your funding requests. Financiers will notice any inconsistencies, so you should review your statements to avoid making mistakes.
Finally, be sure to include a brief analysis of financial information, including: analysis of ratios and trends of all financial statements (historical and projected). Since the picture is worth a thousand words, you can add graphs for analyzing business trends (especially if positive).