Of course, your business makes perfect sense in your mind. You had the lightbulb moment with the original idea and you’ve been working hard since to bring it to fruition — and then keep growing it over time. But now it’s time to convey this idea, along with every other relevant detail about your business, to the outside world so they can get on board, too.
A good business plan will provide readers with a thorough understanding of everything they need to know about your business. It will be succinct yet full of important information people can use when deciding whether to give you a loan or provide funding. Readers of your business plan should walk away feeling like they firmly understand your business — where it’s been, where it currently stands, and where it’s headed in the future.
If you’ve ever seen the show Shark Tank then you’ve already gotten a taste, albeit an intense one, of the types of questions a business plan must answer. Keep reading to learn more about the key elements of a good business plan.
Executive Summary
Kicking off your business plan will be the executive summary. As Yahoo Small Business writes, this document should fall somewhere between one and four pages. Its purpose is to summarize what is contained within the rest of the plan, prioritizing the most important information. This way, if someone is not able to read your entire business plan, they can still get a feel for key information using the executive summary alone.
Business Description
This section gives you a chance to further describe your business, answering questions along the way such as:
- What products do you sell
- Where these products originate from
- Your order fulfillment strategy
- Your company’s legal structure
- How long your business has been going
- Other relevant operational details
- The nature of your industry and niche
- Who your customers are
- Relationships your business has established
- Your brand’s unique selling proposition
Use this opportunity to build a foundation in the reader’s mind about the general nature of your business on its own and in relation to the segment in which it operates.
Market Information
Potential funders will want to know even more information about the broader market surrounding your business — and see proof you’ve conducted a thorough analysis of the market, signaling to them you understand how to gain market share. Discuss what your competitors are and are not doing to demonstrate opportunities for your company. Funders will expect to see calculations projecting your potential market share.
As Entrepreneur writes, as well as discussing the market broadly, you should clearly define your target market here to show funders you understand exactly who will buy your products or services and what the potential reach of your company will be.
Financial History & Projections
This section will contain the hardest data pertaining to your company’s past performance and its projected performance. Be prepared to show “receipts” spanning three to five years in the past — including income and cash-flow statements as well as balance sheets.
Tie in your business objectives to these projections. That is, be sure to address the question all funders will have: “How is this company realistically going to meet its goals in the short- and long-term future?”
A good business plan will convey all the information necessary to give potential funders and partners a comprehensive sense of your business, from how it operates to how it stacks up numbers-wise. These four sections — the executive summary, business description, market information, and financial analysis — represent a solid start for fleshing out your business plan, but there is likely much more information you’ll decide to include based on your circumstances.
