Posted by Early Growth
March 16, 2012 | 5-minute read (847 words)
There isn’t any shortage of great ideas in the world. We’ve heard about a lot of them--and we’ve also had a hand in helping some of these ideas grow into strong and profitable companies. When you’re ready to take your idea to the next level, you need a business plan. A business plan is a document that turns your idea into concrete steps. It is a plan for action; for building your product, taking it to market and making money. When you begin to work on a business plan you will have to start off with some assumptions--based on your experience and research. Your financial section will turn those assumptions into hard data. (This is where we can help).
A business plan is a working document that you will revise frequently as you test your assumptions and hone your model accordingly. A good business plan can do more the woo investors and prospective talent. It is actually a potent tool to diagnose and revise your assumptions, and to turn your mistakes into actionable data.
Though each business plan will be as unique as the company itself, we’ve outlined the major sections of a business plan below to help you get started. Each plan will be organized a little differently, but just remember that your plan should have an internal logic, and one section should flow into the next.
Major sections of a business plan
Executive summary: This section should state succinctly and unequivocally what big problem you’re tackling and how your product answers it. It should be written as a compelling narrative and be well-supported by the rest of the plan. Think of all of the other sections as footnotes to this section. In other words, any questions raised in the executive summary should be answered by data in the other sections. This will be the last section that is written.
Company description: Information about your company, including its core team, history, philosophy and structure. Keep this section brief.
Industry Overview: This will include the long-term outcome, trends, sectors, size, sales, and its major players. In this section you sketch out a picture of where your company will fit into the industry. You should demonstrate a good understanding of how overall industry trends will impact your market.
Market analysis: A detailed analysis of your target market and its demographics.
Competitive analysis: A comprehensive and through examination of the competitive landscape. Here is where you should show that you know your competition well. You should also address barriers to entry as well as why your product or service is not easily duplicated.
Product or services: A description of your product or service.
Marketing plan: How you will reach your target market and persuade them to use your product or service. This section will cover advertising, promotion, publicity and sales.
Operating plan: The costs of day-to day operations, including salaries, facilities, and the cost of getting your product to market. Include a plan for human resources in this section, and whether or not you intend to outsource HR.
Technology plan: What technology you will be using, how much it will cost, and other considerations.
Financial summary: This financial summary will contain three spreadsheets: an income statement, cash-flow projection and a balance sheet, with summaries of each. Your start up costs and operating costs will be detailed in this section. If the executive summary is your business plan’s centerpiece, the financial section should be its engine.
Contact Early Growth Financial Services for help with your financial summary.
Funding request: The amount of funding you are looking for and, if applicable, details about other funding sources.
Appendix: This section should be prepared separately and provided on an as-needed basis. It should include credit history, resumes, letter’s of reference and a list of advisers if applicable. Include any documents that support the body of your plan, including articles and market studies, and any legal documents such as leases and contracts.
After you've brought all this together, you will know your business inside and out and be ready for some hard questions. You will have to gain the trust of both your investors and your customers, but a business plan goes a long way in helping you earn that trust. Remember that this will be your foundation and you will revisit and revise it many times as you grow. Congratulations. Though it may be a long journey you have ahead of you, you have already taken the first step.
Is your business plan ready? Tell us about it in comments below or contact Early Growth Financial Services.
David Ehrenberg is the founder and CEO of Early Growth Financial Services, a financial services firm providing a complete suite of financial and accounting services to companies at every stage of the development process. He's a financial expert and startup mentor, whose passion is helping businesses focus on what they do best. Follow David @EarlyGrowthFS.