A business plan can be a useful process which can give a startup clear direction and also ensures you’ve considered the major components involved in starting a business. A business plan is also essential if you are looking for funding.
Elements of a business plan
- Executive Summary – summarises the key points of your business plan
- Market Analysis – Details on the current target market and buyers needs. Information on your current competitors
- Product / Service – What is your product or service going to do to service those needs better than the competition
- Marketing Strategy – How are people going to find out about your service?
- Structure & Staff – Who are the key people who will be responsible for delivering this product or service
- Financial Projections – What are your cash flow projections over the next 5 years?
- Appendix – CVs of key founders, Certificate of incorporation, tax clearance certificate.
Provides a concise summary to the reader so they have a good understanding of what your company does.
This provides the reader with a clear understanding of your target market, who the customers are, your competitors and the legal factors which should be considered. What are the current market trends? There are a number of frameworks available for analysing the market place.
PESTEL – Political, Economics, Social, Technology, Environment & Legal
Porters 5 forces – Power of buyers, Power of suppliers, threat of new entry and the threat of substitution determines the level of competition within an industry.
SWOT – Internal: Strengths & Weaknesses / External: Opportunities & Threats
Here you describe in detail what is the product or service you will actually be bringing to the marketplace. You should be able to demonstrate what benefits the customer will receive and how it will work and why it is better than the competition. What is your pricing strategy (Pricing Strategy Matrix)?
Once your in a position to provide a product or service to the marketplace, how will people find out about your product? You should consider the following:
- How will the product or service be promoted?
- Who will be responsible for this?
- How much will it cost?
- 4 Ps of marketing (Product, Price, Place, Promotion)
- How does this compare to existing competitors?
- What experience to members of the team have in marketing?
Structure & Staff
Here you will detail who are the key staff and what is their role. It’s important you have a person in place each key function of the business. There are frameworks to help with this such as Porter’s Value Chain. Please consider the following roles:
- Founder(s) – Provide vision and direction to the company
- Product Provider – People responsible for providing the product to the end user
- Sales & Marketing
- Accounting & Finance
- Customer Support
- HR & Recruitment
Financial Projections & Funding Requirements
If you are seeking funding you need to pay extra care with this section. It needs to be very detailed and you need to know these figures when asked. It is very frustrating for investors talking to someone who has no idea of revenue and costs.
You should consider including the following:
- 5 year projected cash flows
- Financial Metrics – discounted cash flows, payback period, IRR, ROI.
- Cost per unit and margin per unit
- Cost of sales & marketing
- Staff costs including recruitment fees
- Premises, light, heat & insurance
- Assumptions which underpin the sales figures
- CVs of Key Staff
- Detailed Financial assumptions
- Terms for potential investors
- Certificate of Incorporation & tax clearance certificate
- Testimonials from customers
Links to business plan templates