Last week, we presented a blog post on “why” a business plan is valuable — be it as a means of proving your company’s mettle to outside investors, or as a method of providing structure and organization to one’s business vision.
In this post, we will talk about what is needed in an effective business plan.
Too many times entrepreneurs over think this critical step in establishing the business.
Simply stated, the plan conveys one’s business goals, outlines the strategies to meet those goals, and predicts any potential problems that may arise, as well as solutions to those problems.
The plan also outlines practical considerations:
How is the organization structured?
How much funding is required to finance said venture?
And what working capital is necessary to keep it going until it breaks even?
According to Kathryn Barker, Senior Vice President of business banking, “think of the business plan as being divided into these three key buckets”, as follows:
1. Business concept. Think of this as a “summary statement.” Describe your organization. Explain the business and its structure. Key executives. Products and services. What problem are you solving? Plans to make the venture a success.
2. The marketplace. Now it’s time to describe the “external”. Your industry. Prospective customers. Competitors. Also include:
- Industry trends
- Market competition
- Branding and marketing
- Customer, behavioral research
- Specific product, service information
- Information about customer behavior aligning with prospect products, services
- Competitive analysis outlining how positioned to compete, win market share
3. Financials. Projections (revenue, cash flow). Assets required to start your business (capital, equipment, personnel). Break-even analysis. Include:
- Supporting financial documents
- Qualitative information outlining operations plans from a financial perspective
- Outline financial management plan
- Describe key processes, as well as facilities, equipment and personnel (with organizational chart)
- Pure financials (income statement, balance sheet, capital asset detail)
If you are uncertain where to start, please feel free to call one of our business bankers to discuss the process today. Or, here are a few additional resources to help you get started. The Small Business Administration provides useful insight on content (“Essential Elements of a Good Business Plan”), as does Entrepreneur Magazine (“An Introduction to Business Plans”).