The key elements of a Business Plan you should pay attention to

October 26, 2020

Elements of a business plan
Jag Panesar, the founder of Xpand, walks you through the key elements of a business plan. No beating around the bush, and hard business jargon, he explains the elements of a business plan in a way understandable for everyone.

If you fail to plan, you plan to fail but how true is this in today’s business world? With new entrepreneurs emerging regularly and climbing the top, is it now just enough to go forth and hope for the best?

No matter how fast the world is changing and how quickly people appear to achieve success, business plans still have a purpose. Hence it is important to know all the essential elements of a business plan and elaborate on them.

What is the purpose of a business plan?

Despite being called a plan, a business plan is so much more than an idea with a few proposed actions. It’s a roadmap which helps owners understand their business; the risks, the opportunities and how to consistently respond to the everchanging market.

The beauty of a business plan is it’s not set in stone. Its purpose is to take an idea, pull it apart, apply disciplined thinking to uncover the flaws, and develop a framework for you to regularly review and adapt in line with your changing business journey.

The key elements of a business plan

So, what should be included in this framework? How long should a business plan be? 

Let’s explore the key elements of a business plan:

Executive Summary

Although first of all elements of a business plan, it’s a good idea to write this section last. This is because it’s a roundup of everything you’ve found and plan to do, and outlines the information included within the document.

Company Description

It may feel like stating the obvious but putting pen to paper and writing down a clear description of your company helps you to document what it is you’re trying to be. Plus, having a clear description enables you to create the key messaging which you’ll use to educate your audience about your business. Hence why the Company Description is one of the most important elements of a business plan.

After all, if you don’t have a clear understanding of who you are as a firm, how can your audience?

This section should also include a complete analysis of how each different part of your business fits together and how crucial they are in the success of your business. Don’t be afraid to go into detail and really drill down into the nitty gritty areas. Some points for consideration here would be:

Market Analysis

A market analysis is pretty much what it says on the tin: an analysis of the market you are hoping to get a share of. In this section, you’ll need to look at any trends and changes occurring both nationally and internationally and identify how these may affect your decisions and successes.

Things to consider:

Organisation Management

Once you’ve got an understanding of the market, your competition, and the opportunities available to you, you’ll need to outline how your organisation will be set up.

  • Who will the managers be? 
  • What is their experience? 
  • How best can they help drive the business forward? 

Sometimes it’s a good idea to mind map or create diagrams of the chain of command. 

It’s also a good idea to define your company structure and decide whether a board of directors is needed. If so, these will need to be laid out here.

Service or Product Line

Whilst you’ve already covered this in the company description, this section is a detailed account of the services and products you’ll offer. Imagine someone else is reading this business plan and work to answer any questions they may have. 

For example:

  • What are you planning to create and sell?
  • What is the shelf life of your product?
  • How does your service or product meet demand?
  • How much does it cost to make your product or what are the costs of offering a service?

Maybe you could even look at supplier costs and any licenses you may need to purchase to be able to sell your service or product.

Marketing Plan

It’s all very well having a sound business plan but if you don’t have a strategy to get your product or service in front of your target audience and show them why they should choose you, then every other area of the plan will be weakened.

A popular framework to use when building your marketing plan is the Solar 7 model which outlines the 7 stages to achieve marketing success. This proven method allows you to cut through the noise and become the market leader in your industry. 

There’s a free video and guide which can be accessed here.

Sales Strategy

A sales strategy doesn’t need to be overly robust and intrusive, but you do need to outline how you will sell the products or services, and it’s best to be as detailed as possible with this specific question. 

Things to consider:

  • Will you need sales reps? How many and how will you hire them?
  • What will their sales targets be?
  • What will your sales targets be over the next 12 months and beyond?
  • What could get in the way of sales targets being achieved?

Financial Projections

Here’s the tricky part that no one really likes to discuss, but important nonetheless. In this section you should reveal the financial goals and expectations – these should be based on the research you’ve done prior to this section. 

You may want to also consult an accountant to work out a cash flow forecast and understand your projected revenue for future years. However, you surely don’t want to fall short of understanding the financial aspects of your business. Therefore, assuming you don’t have enough time to read college literature, you can always rely on and leverage finance movies.

Something people often forget to do here is include finance options which are available and the likelihood that you’ll have to use them. In the event you will have to seek financial help, how will this affect your business as a whole?

Conclusion

At the end of the day, every business is different and that means processes and plans will also differ. Considering this, the elements of a business plan listed above may vary too. Of course, some entrepreneurs have gone onto succeed without a robust plan, but some have also failed because of the lack of one.

If you’re not sure where to start, or feel it’s something you need support with, reach out to a specialist who can help you with each phase.

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