- A well-devised business plan is the unequivocal foundation on which entrepreneurs should build their company.
- In drafting your business plan, there is perhaps nothing more important than a concise and compelling definition of what it is you do. Otherwise known as an executive summary, this is your chance to make a good first impression.
- The most prosperous entrepreneurs will attest to the power of a properly formed team because true success lies in hiring the right talent and empowering them to make their own decisions.
Business professionals and entrepreneurs can generally attest to one thing: drafting a business plan has no fundamental parallel. A well-devised business plan is, therefore, the unequivocal foundation on which entrepreneurs should build their company.
Time dedicated to writing a business plan is time well spent. In fact, you could argue that the more time you spend outlining a plan, the better off your business will be. However, don’t let the prospect of drafting a proper business plan overwhelm you. The basic components of a business plan are fairly simple.
Although your plan should reflect the unique facets of your business, there are aspects that have become ubiquitous across every industry. Having said that, every business plan should contain the following:
Create an executive summary
In drafting your business plan, there is perhaps nothing more important than a concise and compelling definition of what it is you do. Otherwise known as an executive summary, this is your chance to make a good first impression.
Be sure to include the following information:
- Mission statement: Define the parameters of your business and what you hope to accomplish
- Company information: Include a brief summary of when your business was started, the names of the founders and their respective roles, the total number of employees and where your operating locations are
- Growth highlights: Provide examples of company growth; don’t hesitate to complement said information with graphical data
- Products/services: Briefly describe what products or services you provide
- Financial plan: Briefly outline your financial model and pricing assumptions
- Summary of future plans: Identify where it is you want to see your business in the future
Outside of the mission statement, each of these sections should be brief and concise.
Due to the nature of this content, it’s typically easiest to write this section last. Only once you have a complete understanding of everything the executive summary entails should you begin writing it.
However, it should be the first thing people read once the plan has been put together. Think of it as your first impression.
List your products and services
In this section, be sure to identify what exactly it is you are selling. Describe every aspect of your product: cost, features, benefits, distribution, target market, competition and marketing and production concerns.
The more informative you are, the better. Perhaps even more importantly, however, are the reasons people might be interested in it. Why would somebody want to buy what you are selling? What is it that sets you apart from everyone else?
Introduce key players
A business plan that fails to recognize its key contributors is negligent at best. After all, what is a company without those running it? Would Apple be where it is today without the innovative imagination of Steve Jobs?
The most prosperous entrepreneurs will attest to the power of a properly formed team because true success lies in hiring the right talent and empowering them to make their own decisions.
Take a moment to identify the talent you have on your team. Acknowledge who does what and what qualifications they have. People will want to know about who is running the company almost as much as they will want to know about the product itself.
Include industry and market analysis
In writing your plan, you will want to explain how your business model corresponds with today’s market. Subsequently, you will need to conduct a market analysis to justify your position.
The analysis will focus on three things: the marketability of your business, who your competitors are and how you fit into the competitive landscape. Identify your specific industry, target audience and how you plan on reaching out to them.
Develop a financial plan
Data dealing with the financial aspects of a business are typically relegated to the end of a business plan, but that doesn’t mean it is any less important.
In concluding your business plan, you will want to cover your respective financial statements: income statements, balance sheets and cash flow statements. Together, these three provide a relatively accurate portrayal of a company’s current value — plus its ability to pay bills and earn a profit.
You are essentially outlining a high-level financial plan that defines your financial model and pricing assumptions.
For as rudimentary as the concept might appear, and trust me — it is — business plans are not to be taken lightly. Understanding what it takes to craft a document that identifies your company’s existence and acting on its principles will resonate for the duration of your career.
Placing an emphasis on the process will reward you accordingly and serve as a powerful tool for your business to reference in times of need.
Than Merrill is the founder and CEO of FortuneBuilders Inc. and CT Homes; he’s a Yale grad, former NFL player, TV personality, businessman, real estate investor, entrepreneur, best-selling author, national speaker and avid philanthropist. Connect with Than on LinkedIn or follow him on Twitter @ThanMerrill.