An employee recently came up with an idea. He wanted the company to invest money to develop new functionality for the software solution we sell to our customers. The first question to him was, “How much money will it take?” He gave a ballpark number. So he was asked, “How did you get to that number? Do you have market research to show the need for this functionality and a rationale for the cost?” Of course, he didn’t, so it was suggested he work on a business plan.
There are many times a business plan is required, and it’s not just when you are looking to launch a new business. However, a majority of businesspeople don’t understand the key elements of a business plan and the role it serves.
Today we reveals the key elements for developing a business plan shared by author MaryEllen Tribby in her Huffington Post article, “The Eight Key Elements of a Successful Business Plan and How to Make Them Work for You.”
1. Executive Summary: Following the title page, the summary should tell the reader what you want and clearly state what you’re asking for. Length of the statement should be from a half page to full-page depending on how complicated the plan. Within that space, you’ll need to provide a synopsis of your entire business plan.
2. Market Analysis: This section should illustrate your knowledge about the particular industry your business is in and the market drivers that are affecting this industry. It’s the foundation for setting up your opportunity. A market analysis also outlines pricing, distribution and marketing strategies that will allow the company to become profitable within a competitive environment. Begin your market analysis by defining the market in terms of size, structure, growth prospects, trends and sales potential.
3. Company Description: This section should include a high-level look at how all of the different elements of your business fit together. The company description should include information about the nature of your business as well as the crucial factors that you believe will make your business a success.
4. Organization and Management: This section includes your company’s organizational structure and ownership of your company, and describes the roles, responsibilities and qualifications of your management team, as well as any advisory boards or board of directors.
5. Marketing and Sales Strategies: This section defines your strategies for building brand equity, market penetration and lead generation. It explains how you are going to fill the sales pipeline and move your prospects through that pipeline to secure the sale. Start with strategies, tactics and channels that you have used to create your greatest successes. Next, branch out to others that may be working for your competitors. Remember that this section will be continually updated based on your results.
6. Service and/or Product Line: In this section describe your service and product. What is it that you are actually selling? Make sure to emphasize the benefits or value to the market (not the features). Establish your unique selling proposition. This means you have to show not only how your product is different but also why it is better.
7. Funding Requirements: In this section state the amount of funding you will need to start or expand your business. Include best- and worst-case scenarios. Be realistic.
8. Financials: Develop the financials after you have analyzed the market and set clear objectives. You should include three to five years of historical data.
The biggest mistake that most businesses make is that they don’t revisit their original business plan. We all know that it’s a dynamic marketplace, with outside forces affecting businesses every day. Make it a discipline not only to make decisions based on business plans, but to also revisit your business plan and make adjustments on a regular basis.
Source: MaryEllen Tribby is founder and CEO of WorkingMomsOnly.com and MaryEllenTribby.com.