How To Write A Business Plan

What are the elements of a Business Plan?

• Executive Summary – This is intended and written for investors or banks when seeking finance and needs to be written for them and the questions they’ll have, not for your own benefit. It’s usually designed very attractively and includes the business’s mission and brand story. It also includes all the major information about your business and what you’re doing. What’s the morale of your business? Aim to summarise what the business does in 1 sentence, then expand on the business opportunity, unique selling points, basic version of the total addressable market (TAM), expected income and expenses, total capital needed and exit plan, while limiting this section to no more than 3 pages. Remember, it’s easier if you write this last.
• Business Description – Your business description should build confidence in the investor’s mind that you know what you’re doing by demonstrating you have all the pieces of the puzzle worked out. You’ll include the how the business came about, the type of business, the business’s legal structure, products and services you sell, location(s) and the core departments, such as store fronts, website, telesales etc. as well as the experience of your strategic team members that will make it happen.
• Operations Plan – This is where you dive into the details starting with your brand’s vision, mission, values and promise which set the course for your day to day operations. Most importantly you’ll key financials, including your current balance sheet, cash flow forecasts, path to profitability, operating budgets, variance report, current position and financial trends, as well as how you’ll put the investor’s capital to work, what the expended return and payback period will be.

You’ll include a bird’s eye view of the core roles in the business and describe the hiring procedure, performance evaluation, compensation and incentive for each role with the aim to provide context to how you’ll execute on your mission and financial plan. 

• Organisation & Management – All business operations can be reduced to three words: people, product and profits. And here we’ll focus on the people. You’ll detail the management team and who is part of the board. As well as include an organisation chart to give a bird’s eye view of the team and core roles in the business. And then the position, description, primary responsibilities, hiring procedure, performance evaluation, compensation and incentive for each role, along with the education and experience of key team members.
• Legal Structure & Insurances – Here you’ll describe the legal structure of the business. Whether you’re a sole proprietor, in a partnership, a corporation or a limited liability corporation. Who your legal council is. And the insurance policies you have in place to protect the business.
• Products & Services – This is where you dive into the products and services you provide, and describe core products, your brand’s unique selling points, differentiators and which product lines are your best sellers.
• Sales & Marketing Strategy – Here is how you plan on generating revenue and sales. It includes your go-to-market strategy if you’re a new business or launching a new product, your monthly goals and milestones, a detailed buyer persona, key performance indicators and revenue projections, as well as an monthly action plan that will ensure your goals and milestones are met. Investors will be looking for market adoption and building your recurring revenue if you’re a new business, and your overall annual revenue, cost per acquisition, churn and customer lifetime value in order to calculate an estimated payback period for their investment, and assessing it against the inherent risk of your business, product or services.
• Competitive Analysis – Your competitive analysis categorises your top competitors, their products or services, marketing strategies, and their strengths and weaknesses, as well as a SWOT analysis of your own business. A SWOT analysis details your strengths, weaknesses, opportunities and threats and is used to inform many of your strategies.
• Brand Position & Unique Selling Proposition – What are your USPs and how do you differentiate from your competitors. The key differentiators to consider are your responsiveness, product superiority, efficiency, natural resources, market dominance, short term profit, method of sale, distribution methods and technological advantages.
• Financial Plan – This is where you detail your current financial position, include your balance sheet and cash flows, and determine the funds needed for the next phase of growth.

Depending on your business, you may also include:

• An export plan
• A succession plan
• An emergency management and recovery plan

How to Write A Comprehensive Business Plan

Your business plan is usually tailored to the intended reader. But in many cases, especially when starting a new business from scratch, with a new and untested business model, it’ll pay dividends to write a detailed and comprehensive business plan. On top of the fundamental inclusions listed above, here’s what else you might include:

Mission Statement – Think of your mission as though your team were troops on the group in a war. You’re the commander and you say: “our mission, should you choose to accept it, is….”. It’s the reason your troops will go into battle with you. It’s the light at the end of the tunnel. The north star. And often acts as part of your decision tree when making business decisions along the way. It’s short, concise, and every word is chosen for a reason. 

History or Background – Your backgrounder gives context to what makes the business what it is and why you’ve chosen to embark on this particular mission. It’s the story that paints the picture and your motivation for starting the business.

Markets and Products – Here you provide an overview of the size of the opportunity. Your market are your customer base. The market place is where you sell and the products (or services) are what you sell. Who are you customers? What is their problem your product solves? How big is this market? And what approximate value does the market represent?

Goals – If your mission determines the direction your business is heading, your goals are the pillar objectives you must achieve along the way. Often it’s easiest start from the end goal and work your way back… for instance, do you plan to sell the business one day, or keep it and hand it to your children, etc. 

Value Propositions – Value is what a customer gets and the price is what they pay.The value is often a solution to a problem they have; a solution that’s better than one they can find somewhere else. The price is determined by the amount of value they receive. And whether your customer pays you or your competitor is determined by who offers more value for the same price. So here you list what your competitive value propositions are.

Customer Segments – What is the buyer person of the market you are creating value?

Who are your core customers – the 20% of your customers that make up 80% of your sales? And who are the others?

Channels – How will you reach, engage and transact with your customers? This might be your local store, website and telesales. List the different channels here and assign an approximate % of how much of your business flows through each channel so you can assess cost, profitability and risks later on.

Customer Relationships – People buy from people – so here you describe the types of relationships you have with each of the customer segments, and the costs involved in maintaining that relationship.

Revenue Streams – These are the different ways you make money. Your business is often organised in line with your revenue streams, or the product lines or categories you sell to each customer segment. And your revenue streams can vary fastly, depending on how you sell your product. Creating multiple revenue streams over time is important for long term success because nothing lasts forever.

Key Resources – What are the essential elements of your business? The must haves? List each essential resource in association with each revenue stream. For instance, if you’re an ecommerce business, your website is a key resource. And so are your unique products.

Key Partnerships – Who are your key partners? And which resource do you get from that key partner? And which revenue stream are they both connected to? 

Key Operations – What unique operational process is essential for the execution of each of these revenue streams, Key Partnerships and Key Resources?

Cost Structures – What are the core costs of the business? What do each of the key resources, partnerships and operations you’ve decided cost? What are the raw costs of what you sell in each revenue stream?

Market Comparison – Where does your product or service sit in the market. How is it positioned? How are you different to your competitors and market leaders? 

Proprietary Rights – Do you have any proprietary rights, like patents or trademarks, that protect your product and the investment?

Development Roadmap – What can your product or service do now, and over time, what will be invested into the development of what you sell? What are the development goals and what will each step or milestone look like on a step by step evolutionary road map?

Industry Analysis – Summarize the industry in which you will compete. Great sources of information about an industry are suppliers who sell to the industry, equipment manufacturers, and brokerage firm analysts. Here you’ll look at the size and scope of your industry. How is the industry segmented? How are the segments defined? What are current trends and important developments? What problems is the industry experiencing? What are growth forecasts?

Marketplace Analysis – Here’s where you describe the market you’ll be operating and competing within. What is the size of the market and the demand for your products and services. What are the cheapest, the average and most expensive competing products on the market? Is it growing or contracting? Who are the market leaders? And which quadrant do you sit in within your marketplace?

Customer Analysis – Who are the customers in this market? How is the market segmented? What motivates buying decisions? Complete a buyer persona for each of your customers, keeping in mind you might have multiple customer demographics. The more detail the better here – businesses that win are those that best understand their customers.

Competitor Analysis – Who are your competitors? How will you differentiate your customers from your competitors? Why will customers switch to your product or service? And how can you defend against your competitors copying you?

Target Market Strategy – Explain the unmet needs of your customers that your product /service fulfills or the problems that it solves. What characteristics define our target customers? How big is our target market? What share of the market will we capture? What problems are we solving for these customers? How will we position our product or service with our customers? What evidence do we have that our target market wants our product?

Product/Service Strategy – How will your product address the needs of your target market, and how it will contend in the marketplace? What separates your product in an objective market? For what reason will your customers purchase your product as opposed to your competitor’s? How rapidly and how likely can your rivals react to your product and business?

Pricing Strategy – Explain your pricing strategy and why it will be effective with your target customer. Also consider how your pricing strategy compares with your competitor’s.

Distribution Strategy – Describe your distribution strategy, how you will distribute your product, the channels you’ll use, and how you’ll gain access to these channels?

Marketing and Sales Forecasts – Based on your customer, competitor, and market analyses, forecast your expenses, sales expenses, target sales volumes, and revenue for the next 5 years.

Daily Operations Strategy – Here’s where you map out how you’ll operationally execute on your marketing and sales forecasts. This is the mud map. How you’ll allocate resources, what the roadmap for each department looks like, their associated milestones and goals. Who you may need to hire, as well as which areas may have added focus, or reduced focus.

Scope of Operations – Go into more detail here. What will you do in-house and what will you purchase? Who are our vendors, suppliers, partners, and associates? And where do we need to skill up?

Ongoing Operations – How will your company operate on an ongoing basis?

Operating Expenses – Break each revenue stream out into their own department and allocate expense budgets and target outcomes accordingly ensuring there is profit and a margin for error built into the budget. Include their cost of sales (COGS), cost to acquire a customer (CAC), average revenue per account/customer (ARPA) and the lifetime value (LTV) of the customer.

Development Strategy – What does the to-do list look like before you can launch your business or product? How long will these tasks take to complete? How many resources are required? What risks pose a threat to your development plans? Are they technological risks?  Cost risks? Competitive risks? And how will you mitigate these risks?

Development Roadmap – What milestones must be completed, and what is your timeline for each for launching your business and products? Plot your roadmap as far into the future as far as you can.

Development Expenses – Describe the associated development costs that appear in your financial statements.

Administrative Expenses – Describe the associated administrative costs that appear in your financial statements.

Financial Assumptions – What assumptions have you made in planning your financial forecasts? List them here so you know what to keep an eye on as your roadmap evolves.

Financial Forecasts – Summarize your cash flow and income statements, and balance sheets for 5 years into the future. Year 1 should be broken down monthly, the second year quarterly, and the last three years annually. Also include break-even analysis, valuation calculations.

Capital Requirements – At this point you can assess how much new capital you need?  What is the timeline for closing and receiving the new capital, and extended runway once capital is secured?

Financial Risks – What are the financial risks in your plan and how will you monitor, manage, minimise and respond to them?

Exit Strategies – What is your preferred exit strategy? And what is your exit strategy if the business does not develop as you hope?

Investment Requirements – Using your cash flow analysis, what investments do you require to achieve your plans? 

Valuation of Business – What is the current value of your company?

Offer – What is the structure of your capital raising deal? How much money do we want and how much of the company are we willing to give away? What is the planned exit strategy for investors and their anticipated return for investors?

How to brand your business?

Brand awareness – how aware your customers are of your brand – is one of the most valuable aspects of growing your business, if not an asset in itself. Your brand is your reputation. And while you could outsource this part to a freelancer or creative branding agency, coming up with your brand can often be harder than it sounds. Your business’s brand is its personality, what it stands for, and the reason your customers fall in love with you and want to tell their friends about it.

When defining your brand, it’s important to consider these elements:

• Your brand mission
• Vision
• Values
• Promise
• Position
• Story
• Voice
• Unique Selling Points

You’ll also define your buyer persona which comprises of:

• A consumer overview for each type of customer (and you may have a couple), including age, sex, location, interests, occupation, income, marital status, behaviours and the core pain points your brand solves
• Also, what time of the day they’re most likely to engage your brand
• On what channels
• And via what form of communication technology, be it billboards or social media

It’s important to define how your brand differentiates itself from your competitors, and which of your many differentiators appeal most to each type of buyer persona.

Your branding will also define your look and feel, your content pillars and therefore your marketing strategy and content marketing.