Establishing and managing a startup can be exciting, as well as chaotic, and stressful. To boost their chances of success, entrepreneurs must plan every aspect of running the business. For most entrepreneurs, putting together a business plan is the first step in their journey of creating something from nothing. According to Harvard Business Review, entrepreneurs with business plans are more likely to succeed. A business plan helps entrepreneurs stay on track, avoid roadblocks, and scale fast. Some important components of an effective business plan include:
While the business plan has many important components, the executive summary is unarguably the most important since it summarizes the goals and objectives of the business, the products, and services, how it addresses the challenges, and what makes the startup unique. Unless the executive summary is crisp and compelling, readers will not be interested to read the rest of the document. Even though the executive summary is the first thing a reader encounters in the business plan, you should write it only after completing the rest of the plan.
The company summary provides the business profile, including the why, when, and how the founders built the startup. Since one of the purposes is to attract investors, you should give as much information as possible. This section intends to establish that the founders are the best people to run the business and how they are planning for success. It may be helpful to detail the qualifications, knowledge, expertise, and experience of the founders relevant to the venture. The common thread running across all business plan examples is that they provide details on the company, such as its name, the business structure, location, mission, competitive strength, etc.
This part of the business plan covers information on product development and marketing strategy, including customer acquisition. Because there is so much data involved, you need to be selective about what you include. A typical market analysis should include a detailed profile of the target customer, a definition of the selected market segment, and a summary of the growth projections.
Readers of the business plan will be interested in the talent that can drive business success because only companies with the right people can expect to cross the unforeseen hurdles every startup will face. In this section of the business plan, you should highlight the education, qualifications, skills, and experience of each member of the startup’s core management team. Readers will expect details of the remuneration of the individuals and whether they have a stake in the business.
This section provides readers, especially potential investors, an overview of the financial performance. The top things to include are sales forecasts, budget for expenses, cash flow statement, income and profitability projections, and the balance sheet showing assets and liabilities. It is important to be conservative and realistic in your projections.
Crafting a business plan is not the easiest of tasks, and you should never rush it. It may take several iterations to get it ready, but you must insist on it being well-researched and thorough and showcase your product and services in a way that your passion sparkles.