There are thousands of business plans created in a day in an organization. Are they all perfect and up to the mark? Apparently, no. They require lots of revisions and then become the final draft. However, there are several components and a structure that leads us to a good business plan, and following them can help us eliminate multiple revisions. Would you like to know about them? Well, we are here intending to help you out and guide you through the process of creating a comprehensive business plan format. Let us glide through all the elements of a business plan one by one.
Table of Contents
- 1 What should one remember before starting to make a business plant?
- 2 What must a business plan format be like?
- 3 Section 1: Summary, or an Executive Summary
- 4 Section 2: Description or a General Company Description
- 5 Section 3: The Growth Opportunities
- 6 Section 4: Description of the Industry and the Market
- 7 Section 5: Strategy
- 8 Section 6: Explanation of the Business Model
- 9 Section 7: Details of Management Team and Organization
- 10 Section 8: Plan for the Marketing
- 11 Section 9: Plan of Operation
- 12 Section 10: Plan for the finance
- 13 Section 11: Appendix
What should one remember before starting to make a business plant?
We all know how much importance research and observation hold in businesses. Therefore, before starting with the business plan, you need to thoroughly research the market. Plus, observing the market trends is equally important to create a business plan format.
For research and observation, one can use the Internet, connect with suppliers and their associations, and follow up the expert’s advice. Besides them, do not miss to study your competitors. All these will take your research results to another level and help you figure out the next steps more easily. You will readily understand what are the factors affecting the industry you plan to work on.
Moreover, you should try to write your business plan yourself or under your guidance. It will help you eliminate any complications in the early stages. This will also bring you closer to your business module and help you understand things more effectively.
However, this does not mean that you can do it alone or must do it that way. You will need different people from different departments like finance and administration. All this will help you in covering the three major areas in a business plan format: the Business Concept, the Marketplace Section, and the Financial Section.
What must a business plan format be like?
It is an intricate job to create a good business plan so the one creating it must have a great grip on the matter. The components that we will discuss in this section are interrelated. We can not write them in a different order or isolation as it will just create a mess in the business plan format. The following are the integrated sections of a business plan format structurally:
- Summary, or an Executive Summary
- Description or a General Company Description
- The Growth Opportunities
- Description of the Industry and Market
- Explanation of the Business Model
- Details of Management Team and the Organization
- Plan for the Marketing
- Operation Plan
- Plan for the Finance
Section 1: Summary, or an Executive Summary
While writing a business plan, one should know that this Executive summary holds the future of the business plan. This is the first component of your business plan format and the first thing that the readers come across.
Don’t be confused, but even if it is the first part, the executive summary is always written after every other part of the plan is complete. It gives the reader a quick rundown of what your business plans hold. To be precise, the caliber of your executive summary decides the future of your business plan.
An executive summary consists of a few crucial elements. These pointers are a must inclusion in a summary as they define your plan in brief.
- Business Concept: In this part, you have to add the details of your business in terms of products and market. The description of what products you will sell, the target audience, the market competition, and the features that make it advantageous over the rest, go here.
- Financial Features: This section will include the minutes of the finance part of the business module. While writing it, you have to include the return on investment value, the flow of money, sales, and profits.
- Financial Requirements: You have to provide accurate estimates of the investment needed and how much will be needed to grow.
- Current Business Position: You must provide your current position as an organization to the readers. This section will also include the history, owners, distribution, legal reforms, and much more like that.
- Major Achievements: Any success that helps in the development of your company will benefit the business plan. This can be anything from patents, contracts, acquisitions, to marketing and sales results.
Section 2: Description or a General Company Description
In a business plan format, General Company Description follows the executive description. It includes an overview and a detailed description of the organization. We have also included the outline of your companies’ business.
Like the executive description, the general company description also includes some key elements that boost the caliber of your business plan format. We have mentioned these components briefly as follows:
- The name of the company
- Type of legal entity it has
- The ownership of the company and its distribution
- Company’s owned assets
- The mission statement of the business
- The goals and objectives of the company
- Features of the company which will help in operating this business
- Lastly, the core strength and companies competencies
You must remember that you will get opportunities to describe every section of your business in detail later in your business plan. Different sections will cover different sections like marketing, finance, operations, competitions, growth, and whatnot. With this in mind, make sure that you are not cramming everything in general company description only.
In this part. Your major focus should be the industry. The ecosystem in which your business will work, you can describe that here. Taking time to understand the industry and then preparing this section will be the best. It will give you great insight, leading to a comprehensive general company description.
You can provide information like how big or advancing the industry is and the reasons for its popularity. Moreover, you can add how many growth opportunities your business will have in this industry and what are the market trends.
Besides all this, you can talk about your target audience or market. Your general company description must include how you will distribute your product in the market. Then come to the local advertising, promotions, and strategies for customer services. This is the place where you let readers know about what puts you apart and shining from the others like you.
Lastly, this section must include the profit margin of your business and how you are going to make it. Also, add the details of funding you will need and where do you plan to take it from.
Section 3: The Growth Opportunities
This section of your business plan will explain to readers your vision in depth. You have to make sure that you explain how many growth opportunities are available out there for your business. Besides, the Growth opportunities part of the business plan format plays an important role and shows the business potential.
Your work in this section will include the ways of growing the business you are talking about. It will have the trends that are positively affecting the particular industry. You can also include how this industry came into the picture and what is it lacking. Next jump to how your business idea can fulfill the need and work things out.
Also Read Article on How to Prepare CMA Data.
Section 4: Description of the Industry and the Market
As the growth, the opportunity part shows your insights on growth. Similarly, a description of the industry and the market throws light on what you think and found after researching about the industry and related market.
First, you need to talk about the factors that affect the market and industry. Then break down these factors into chunks and describe each. You can dive into the problems in the industry, customer and supplier power, how can you beat the early ones in the industry and competition.
Let us take a look at each of these in a question and answer format:
1. What can be the hurdles in the industry?
Your business type determines the type of problem you will face. There can be issues in the capital or production, types of machinery or technologies, branding or customer’s attention, marketing or training, legislation or skills. All these can become an issue and there are many such unseen reasons.
2. How much effect do the customers have?
To this, we all know that a brand’s value depends upon the customers. If the customers are loving the service or the product and keep loyal then they can take a business from zero to infinity. However, if they do not feel anything worth in your brand, then you better be prepared for the worst.
3. How do the suppliers affect the business?
They bridge the gap between the business owners and the customers. This shows that they are needed to be taken care of. Their charges vary from supplier to supplier and can affect the profit margins of the brands.
4. What do you think of the competitors?
Your competitors will need a lot of consideration and thought on your part. You need to know about them in detail and also understand their market position before taking any step further.
5. What can be major components that affect the industry?
The changing government policies, economy, trends, and technological development are some of the major components that affect the industry.
Section 5: Strategy
Strategy can only develop with proper research and observation. You need to familiarize yourself with the needs and factors of the market to understand it better. Here you make the readers understand how you will make ground for your business in a market full of competition.
There are variables like competitors’ trends, market and customer needs, and motivation that will influence your positioning strategy. You will need to understand the way your competitors are doing their work and positioning themselves before you start with your product or service positioning.
Your product might have things that your competitors’ product lacks but is needed by the target customer. This can be a positive sign for your stabilization. Describe these types of details in this section of your business plan as this is what it stands for in a business plan format.
Some questions that your positioning strategy must answer are:
- What is the business focusing on a specific niche or a broad mass project?
- Which activities will you undertake to make yourself undeniably unique and hold a prominent ground in the market?
- What do you think makes your business special?
- How can you assure the success of your business in the market?
- What are you offering that is different from your competitors?
- What will be the value for the customers? Can you describe it broadly?
Section 6: Explanation of the Business Model
In other words, this section of the business plan format is called the profit engine in a business. This determines the future of your business and the rate of success in your business. There are several things that you might like to cram in this model, but don’t do that as bulkiness will make it boring.
The products or the services that you will offer through your business go in this part. You need to write about your uniqueness and elaborate on it. Then you must discuss your customers and the way you make a profit from it.
In a goof business module all the below-mentioned are includes:
- The source from where the business expects the revenue
- What will be the cost involved to reach that revenue?
- The amount of profit made by the business.
- The initial investment that the business will need to start and had a footing
- The factors that will lead to success.
- The assumptions that will show the working of the business.
You have to keep three things in mind to get a perfect business module: the quality of the customers must be high, the product you provide must have a significant value, and the margins for profit needs to be significant as well.
However, you would need to pay attention to growing enough funds, delivering quality products so that your customers are satisfied, and handling the market properly.
Section 7: Details of Management Team and Organization
Let us talk about behind the scenes. This part of the business plan format includes the team that is working backstage. This includes their names, designations, experience, educational qualifications, and more. You can show it in a form of a chart if you have a small number of employees. Otherwise, you can make a hierarchy and show it more effectively.
You must explain their roles and responsibilities in the team and organization. Also, you will look professionally educated if you go beyond the managers and describe the supporting staff that one might need in the business.
Section 8: Plan for the Marketing
As the heading shows, the business plan format had this section to describe all the things related to marketing and its strategies. There are more than a few things that you must add to your plan for marketing such as:
- Why should the customer value the service or the product you offer?
- A detailed and precise description of the market
- How do you want or will the customer perceive your positioning in the market?
- The channels that you want to use to get to the market and reach the customers
- What will be your pricing strategy and the margins?
- How do you plan to manage the marketing using advertisements and the PR department?
Section 9: Plan of Operation
In a business plan format, this section covers the information on day-to-day operations and handling of a business. It explains everything from the people working in the industry to the required location, types of equipment needed for the process it involves. The plan of operations also explains in detail the expenses needed for the operations.
As operations differ in every industry but there are still some overlapping in the operation Venn diagram for every business type that we are mentioning below:
- The operation cycle must be included. It will describe the overall functioning of the business from manufacturing to sale.
- There is a need to add the source from where the skills and materials will be added.
- The outsourcing needs, the in-between relationships in the operational chain and their management is a point of discussion too.
- The cash cycle and receipts of the business will get added in this section.
There is a space to highlight any other key detail in this section. You can add up the benefits or add financial charts, regulations, and some other factors.
Section 10: Plan for the finance
This section discusses the company’s future financial plans and other related estimates. You need to add a few details of your financial plan related to the business and for supporting it, you will need some projections. However, try not to make it bulky. Trust us, you will have the chance to add all the examples soon enough.
The key documents to be included in the plan for the finance are as follows:
- The money you need for this start-up and the way you plan to receive it is the most important thing and must be included. The details on these expenses are important.
- You need to draw up a year profit and loss projection which needs to be in a month-by-month format. Additionally, you will have to make a three-year projection too with a quarter-by-quarter detail.
- After this, you have to make a money flow projection in the same manner as you did for the profit and loss projection.
- An illustrative balanced sheet with the time of startup with the record of every year.
- Some evenly broke calculations for easier understanding.
You must give your maximum to this part if you want astute investors to consider the investment in your business plan. They are hawk eyes while reading the charts, calculations, sheets, and everything else in this section. Three parts of this section can be said as:
- The income section: You need to start with this section if you want good scores and have a good first impression. Here, you discuss your business’s potential in earning money. Overall, it reflects your business sales and expenses.
- The cash flow: This is a plan of the cash that will be needed or will come in. If needed, then where can the business get the sum or how can it generate that much. It shows how much a business earned and paid for expenses at the end of each term.
- The balance sheet: This part is the summary of the upper two parts broken into three subcategories: assets, liabilities, and equity; and presented in the form of a sheet. You only need to do this once a year and summarize the year’s cash flow and income. However, it must cover all the key points from both sections.
Section 11: Appendix
This is the last part of the business plan format and concludes the module. The appendix can also be referred to as a description of references. It includes additional information in form of documents attached to it. The business plan readers often want to refer to other things to understand the business idea better and the appendix is the place for their reference.
There are certain kinds of references that you can add to a business module. We have mentioned a few of them as examples for you below:
- Pictures and maps of the location you would like to focus on
- Another type of plans and blueprints that you referred to
- References from your industrial study
- Advertisement and other similar materials like brochures
- Projection and calculations of the finance in detail
- Contract and lease copies
- The list of the equipment needed to be purchased or already owned
- Some magazines and other kinds of articles
- References from the market research
- Future customers’ letter of support
- The list of assets that can be used as collateral and get a loan
Apart from all these, if other documents can support your business plan assumptions, add them in the appendix. This makes your plan less bulky. You can add all the examples and proofs of the other parts in the appendix which tackles the overloading in the other parts of the business plan.
From the above mentioned, we hope now you understand the concept of business plan format and will be able to create an exceptional business plan too. All these parts when combined bring out a high-caliber business that knows its way to success with consistent growth.
However, there are still a few things that you need to pay attention to. Your command of the English language and quality work is important. Moreover, don’t shoot in the dark rather make the plan as realistic as possible. You can always seek professionals to help you out in the language part but the rest is up to you.