Planning for Success: Business Plan Essentials  

     

A business plan represents an essential document for any company regardless of its stage of development. It is a crucial first step for an entrepreneur when moving from a business concept to the realization, funding and development of the venture.

A plan achieves multiple objectives. Most importantly, it requires management to carefully think through the company's purpose and goals and articulate how such objectives will be met. As the business develops, the plan can guide decision making on operational and financial issues.

In addition, a well thought-out, comprehensive and credible business plan is almost always required in order to obtain funding from capital providers such as banks, angel investors or venture capital firms. Entrepreneurs should therefore always assign the necessary time and resources to produce a thorough plan as evidence of their commitment and professionalism.

Prior to writing the business plan, management needs a clear vision of the following core elements: the company's products or services, the target customer base, the firm's marketing strategy and competitive advantages, and how the venture will be financed.

The business plan will identify the strengths and risks of the business, provide an overview of the market, set out financial projections, articulate long-term goals and define key targets to be achieved. Such goals and targets should be both realistic and quantifiable. The plan should serve as a reference document in the future for determining if the business is growing and evolving as anticipated.

There is no single template that is appropriate for all business plans, although companies should aim for a clear and concise document of 20-25 pages plus an Appendix, if required, that contains additional information or financial data. There is a range of business planning software packages available that will aid in defining relevant areas that should be addressed and will also provide templates to avoid drafting the document from scratch.

Although business plans have many common elements, the content will differ depending its aim (e.g. attracting venture capital funding vs. an internal operational plan). However, a comprehensive plan will likely incorporate the following sections:

  • Executive Summary. An interesting and concise overview;
  • Company Description. Details of company's products and services and stage of development;
  • Market and Customer Analysis. Identification of target market and client basis and company competitive advantage analysis;
  • Marketing and Operations. Plans for production of goods, provision of services, sales and distribution.;
  • Company Organization. Overview of key employees, organizational structure and anticipated staffing needs;
  • Key Objectives and Timeline. A schedule of quantifiable goals and associated timing. Identification of critical elements necessary to achieving these objectives;
  • Financial Data. Historical and projected financial information and statements based on company's business goals and current and anticipated funding; and
  • Appendix containing supplemental information, if required.

The process of producing a business plan is invaluable. It requires entrepreneurs and management to focus on all aspects of the venture's goals, operations and funding requirements. In addressing these fundamental elements, the business is then better able to communicate the company's vision to outside parties including investors, lenders and customers.

Other resources

  • Can a Business Plan Consultant Add Value?
    To raise capital, a business plan is the most important document that an early-stage company produces. Hiring a consultant to produce all or part of it can be a wise decision. It will help to create a well formatted document that meet the standards expected by a venture capital firm. On an other hand, you should never forget that you will be responsible for the execution of the plan. So choose carefully.
    Read more: Business Plan Consultant
  • Angel Financing and Venture Capital Criteria
    Investors will look to gain a clear understanding of the company from the business plan, including how much capital is required, how profits will be generated, the unique aspects of the company and its competitive advantages.
    Read more: Venture capital criteria
 

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