5 components of business plan

• Ted Iwere Coaching
• Growth Strategy
• Growth Financing
• Managing The Team
• Marketing And Sales
• Processes And Systems
• Client Area
• Resource Group
• +2348156121212
• [email protected]

The 5 Components Of A Business Plan

Starting or growing a business requires careful planning and execution. A well-prepared business plan is an essential tool to ensure the success of the venture.

It provides a roadmap for the journey, by outlining the goals, strategies and actions for achieving the objectives of the business. It offers invaluable insights into the viability of the business and its potential to grow into a sustainable commercial enterprise.

A comprehensive business plan includes an executive summary, market analysis, competitive analysis, marketing and sales strategies, financial projections and operational plans. These elements help the Small Business Owner to define the business, identify its target market, understand its competition and develop a plan for making money.

A properly prepared business plan is critical for securing funding from investors, attracting talented people to the leadership and management team and growing a customer base.

Components Of A Business Plan

The key components of an effective business plan are:

1. Executive Summary

The executive summary is a condensed and periscopic view of the business plan. It captures the essence of the business in a way that captivates the attention of its reader. The executive summary is the last to be written and reflects the key points in the subsequent sections of the plan.

The executive summary must give an overview of the concept of the business, state the mission of the business, offer a snapshot of the products or services of the business and provide a financial summary that includes funding requirements.

2. Description Of The Business

Describing the business is a way of revealing the heart of the enterprise. This includes the history of the business, how it was founded, the record of its growth and the milestones it has reached over time. 

The current condition of the business should cover its products or services, the its markets, its achievements and its challenges. This should also include its team, with highlights of the skills and competencies that they contribute to the success of the business.

This section of the plan should contain the long-term goals of the business and the direction that the owners want to take it. These could include growth plans , introduction of new product or service offerings and similar strategic initiatives in the works.

This section of the plan delves into the mission and vision statements of the business. It spells out what the business is about and explains the unique competitive advantage that distinguishes the business from others in the industry.

The essence of this section is to give the reader a clear understanding of the core identity of the business. This helps a potential investor to appreciate the value proposition of the business and make an informed decision on whether to invest.

3. Analysis Of The Market

The market analysis provides the lay of the land, and the marketing and sales strategy of the business. It helps to establish a clear understanding of the market and the industry in which the business is operating, explores the target market, trends in the industry and competitor analysis. It evaluates the challenges that may arise in the market.

An effective market analysis begins with identifying the target market. This involves understanding the needs, preferences and behaviours of the customers, and determining how the product or service offerings can meet their demands.

It is also important to analyse the trends in the industry to determine the direction of the market and how to adapt the product or service of the business to these changes. Competitor analysis, another aspect of market analysis, involves researching and analysing the competition to identify their strengths, weaknesses and strategies. This helps to identify growth opportunities and development of a unique selling proposition to set the business apart from its competitors. This helps in designing a sound business strategy, which involves identifying possible obstacles in the market, regulatory changes, economic downturns and changes in consumer behaviour.

The anticipation of these challenges sets the stage for creating contingency plans to mitigate negative impact and ensure the enduring success of the business. This process can be enhanced by the collection and analysis of data on market trends, customer behaviour and competitor strategies, with a view to identifying growth opportunities. The use such qualitative and quantitative data as market demographics, industry overview and SWOT analysis (Strengths, Weaknesses, Opportunities, Threats), must support the effort to produce a well-rounded market analysis.

Must Read: Step-By-Step Guide To Building A Business System

4. Organisational Structure

A critical concern for stakeholders is the presence of a structure for the business, supported by a team of competent and experienced professionals. This section of the plan highlights the company’s structure, its key personnel and the positions they occupy in the business.

This section underlines the point that the business has a transparent organisational structure, profiles its top management personnel, showcases the qualifications and experience of the team and lists its advisory board or mentors.

5. The Financial Plan

The financial plan sets the stage for how the business will keep its scores. It provides the performance indicators for monitoring the effectiveness of the plan, checking the fiscal health of the business and tracking the march into its future. This includes the minute details of startup costs, operating expenses, revenue projections, cash flow statement and break-even analysis.

The creation of an effective business plan requires the Small Business Owner to carefully weave together the five elements itemised above. Each element contributes to a complete narrative that embodies the essence of the business and builds its foundation for long-term success. The executive summary gives an abstract of the entire business plan. The market analysis includes detailed research on the target market, the competition and industry trends. The description of the business outlines its history, mission and vision while the products or services showcase what the business offers. The marketing and sales strategies spell out how the business plans to reach and convert its target customers.

Crafting a business plan is a time-consuming and challenging process. It requires detailed research, thoughtful analysis and strategic thinking. Whether the Small Business Owner is seeking funding from investors or pitching the business to potential partners, a good plan provides a document that guides internal decision-making and serves as a persuasive instrument when presenting the business to its stakeholders. It helps in making a compelling case that increases the chances of sustainable success.

If you need help growing your small business, contact us today.

Get more from The Business Builders!

Read back issues of our blog.

Buy The Small Business Handbook.

Enrol for The Business Accelerator Programme.

Download our FREE eBook on How To Find The Money to Start, Grow and Scale your Business.

Watch SME TV, our YouTube Channel.

Sponsor The Business Builders Newsletter.

Our Products

Strategy Session The Business Accelerator The Small Business Handbook Be A Guest Writer!

SME Media Limited 1 Olayinka Obire Street, Osapa London Estate Gardens, Lekki, Lagos, Nigeria. +2348156121212 . [email protected]

The 5 Core Components of any Business Plan

Whether you have a business plan, have decided you don't want one, or are "starting to tomorrow", it's important to know what should be in a business plan.

We're experts in writing business plans so we've come to learn what the 5 critical components of a business plan are.

So, in this blog we want to give you some insight into what these key components are, and the most important information you want to include in each section of your business plan.

Here's our top 5 components of a business plan:

Management and organizational summary

Environmental scan

Sales and marketing plan

Operations model

Financial model

#1 - Management and organizational summary

The number one section that we always recommend is the management and organizational summary.

More specifically, have the organizational structure and organizational chart in your business plan.

Use a simple tool like Canva (no, we're not sponsored, we just love Canva), to make an organizational chart, sort of like this:

It's super easy to make and (clearly) doesn't have to be the most beautiful thing in the world.

That said, it's very important to not only highlight what the organizational structure looks like, in addition to describing what each key role entails, as well as the approximate compensation strategy.

This will give whoever reads the business plan (investors, lenders, partners, staff, etc.) an idea of what the company structure will be.

#2 - Environmental scan

An environmental scan is a fancy way of saying "market research" for a business plan. However, this is just a bit more targeted.

"Research is what I’m doing when I don’t know what I’m doing." – Wernher von Braun

An environmental scan is a compilation of research that understands some of these topics:

Consumer demographics,

Potential size of the target market,

The geographic and location details of your target market,

Considerations for the area,

Opportunities or gaps within the market,

Competitor details.

Some of this info can be highlighted in other sections like the marketing, sales, and even risk sections of a business plan, but here is a great spot to include all this info about the market, and prove that you know your stuff.

#3 - Sales and marketing plan

What is a business plan without sales and marketing?

Empty. That's what we think at least.

But this is arguably one of the most important parts of a business plan because for a lack of better words, this describes how you're going to make money.

Some of the important concepts and info with regards to sales and marketing to include in your business plan are:

Sales forecast,

Sales channels,

Marketing channels,

Digital marketings strategy,

Rollout plan for marketing and sales,

Target consumers and demographics.

In a nutshell, you want to tell whoever is reading the business plan how you're going to reach people, how you're going to make money, and who you're going to sell and market your products and services to.

Because this is such an important part of a business plan, it's really important you know exactly how to format this.

If you're not too sure, reach out and send us an email and we can chat about your business plan.

#4 - Operations model

An operations model can be a finicky part of a business plan, but it's important nonetheless.

Why it can be tricky is because there's a lot of different ways that you can write this, and a lot of different pieces of information that you can include.

Commonly, here are the things that you may find in an operations model:

Product & service rollout plan,

Logistics and supply chain model,

Value chain model,

Inventory management systems,

Product & service delivery model (how you're going to get things to your customers).

It's important in the operations section of your business plan to include only what's relevant to your business.

If you don't have inventory, and only offer services, then the best option may be to include a delivery and value chain model, or even a service rollout plan to demonstrate the timeframe of when you plan on offering your products and services to customers.

#5 - Financial model

You often see people say "cash is king".

Well, so is the financial model.

Generally, on a business plan you want to include a few different models:

A P&L model, or "profit and loss", to show income and expenses,

A forecast, to demonstrate revenue and profit in a few different scenarios for the future,

A balance sheet.

At ASC, we aren't accountants or financial gurus... But we know some!

It's always a good idea to consult with an accountant or financial professional if you're learning how to prepare these financial models and documents.

That said, even if you prepare rough estimates for your business, it is going to look great on your business plan.

A little bonus...

Since you've made it this far. Something that is always necessary on a business plan is an Executive Summary.

This is the summary at the start of a business plan that essentially summarizes the entire document in just 1 page.

Yes. The whole thing, in one page.

Think of it as a TL;DR for investors, banks, or other interested parties.

How we always recommend writing the executive summary is to take each section of a business plan, and summarize the key points and ideas into one paragraph. This way, you'll have 5-7 small paragraphs on a page summarizing your entire business.

These can be tough to write, just like the rest of a business plan if you're unfamiliar with them.

So, our best recommendation is to talk to an expert... Not to toot our own horn, but like us! The folks at ASC has over 7 years of experience writing and perfecting business plans, so we know how to speak to them, and we know the nuances of them!

If you want to get your business plan started the right way book your free consultation with us, and let's get started.

• Small Business Tips

Recent Posts

How to Become Successful Before you Start your First Business

Small Business Accounting, Simplified: Our Top 3 Small Business Accounting Software Solutions

What is the Entrepreneurial Mindset? Our take, and how we future proof our client's success

Comentários

5 Key Elements of a Successful Business Plan

Business Plan Template

• October 17, 2024

Whether yours is an emerging startup or a business trying to scale—a business plan is crucial to turning your business endeavors into success.

A well-crafted actionable plan develops strategies, streamlines operations, guides finances, and secures funding. It offers the direction necessary for staying focused and dedicated to your goals.

However, this is only true when your business plan is rooted in reality. A poorly developed plan derails progress and sets your business up for failure.

So what exactly is the secret to developing a truly successful business plan?

Is it a detailed financial forecast? A strong vision for the future? Or is it the combination of several essential elements working together?

Well, let’s understand the fundamentals, or as we say, the 5 key elements of a successful business plan with this blog post.

Let’s jump straight in.

5 key elements for a successful business plan

Every plan is unique, be it in terms of its structure, content, or the business aspects it addresses. However, if we were to observe a common pattern between all the successful plans, they have these 5 elements in common.

Key 1: Clear MVV (Mission, vision, and value statement)

A clear mission and vision statement offer a crisp and undiluted understanding of what your business is and why it exists. It helps the reader grasp the core message of your business quickly, without having to read a detailed business plan.

A vision isn’t just a statement to add to your business plan. It’s a foundation upon which you will develop your business goals, strategies, and tactics.

It’s a powerful PR and marketing tool that will effectively convey your business essence to the customers, investors, and other stakeholders.

Now, developing your MVV requires a clear understanding of the business’s core purpose, beliefs, and values.

To help you identify your purpose and values, try answering questions as simple as:

• What value do you bring to your stakeholders?
• What’s the purpose of your business?

Don’t indulge in the complexities of perfecting the words. Instead, focus on listing down the stakeholder’s pain points your business will address.

As for your ultimate vision, list down your long-term aspirations with the business. To articulate your vision better, try answering: what does success look like 10 years from now?

Once you have the core ideas for your vision statement, simplify it and condense your vision statement into a line or two.

Now there are many examples of a good vision statement . However, before we check them, here’s a vision statement for an energy company,  a perfect example of how a vision statement shouldn’t be. ( Yes , you read it right- shouldn’t be).

What’s wrong with this? It’s verbose and fails to convey clear business aspirations. Seems like a vision that was developed just for the sake of filling in a business plan.

Now, take a look at these examples:

• To make people happy: Disney
• To create a better everyday life for many people: Ikea
• Bringing inspiration and innovation to every athlete in the world: Nike

These are some brilliant vision statements of leading companies across the world. They’re crisp, bold, and not limited by hyper-specific outcomes.

Key 2: Comprehensive market analysis

A successful business plan is one that demonstrates a clear market opportunity for your business. A business plan that offers sufficient insight into the market, customers, and the competition.

Backed with data and expert analysis, this section helps with strategy formulation and decision-making. This section evolves with changing market conditions and influences the changes in other sections.

So, what exactly should you include in your comprehensive market analysis?

• A general industrial overview and a detailed niche market analysis.
• A clearly defined TAM (total addressable market), SAM (serviceable addressable market), and SOM (serviceable obtainable market).
• Buyer’s personification of your target market.
• Competitive landscape of your business.
• SWOT/PESTLE or related competitive framework analysis with your top competitors.
• Competitive advantage to turn your business successful.

In addition to this, a market analysis may also cover details about regulatory changes related to your market.

However, before you start writing your market analysis , determine whether your plan requires an in-depth analysis.

A business plan prepared for approaching an investor will require you to cover all the key aspects. However, if yours is an already established business analyzing a specific purpose (introducing a new product, making product changes, or entering a new market), you can steer away from a basic industrial overview and focus on trend analysis.

That said, market analysis is crucial for all sorts of business plans. How you structure this section doesn’t matter if yours is an internal use plan.

In terms of placing together your market analysis, visuals will have a more profound impact than pages of dense text. It will keep the readers engaged and explain high-value points of your analysis in an easy-to-absorb format.

Key 3: Strong financial projections

Projections are a crucial business plan component that demonstrates the financial feasibility and potential success of your business.

However, for projections to offer a sustainable and realistic picture, you must base them on hard data and metrics. Baseless assumptions and guesswork undermine the credibility of your business plan.

Established businesses can use historical data to forecast their sales, revenue, and cash flow. However, startups with no previous data can benchmark competitor’s data and industry standards to make educated guesses.

Now, forecasts should factor in various optimistic, worst-case, and aggressive scenarios to navigate unexpected challenges. This will help the investor evaluate your preparedness for meeting different market conditions.

Now, if you’re preparing a business plan for investors , here’s a checklist of all the financials they would need:

• Historic statements (income statement, cash flow statement, and balance sheets)
• Financial forecasts (3-5 years)
• Funding utilization plan
• Financial ratios
• Break-even analysis
• Startup cost

It’s important to understand these figures thoroughly as investors would have plenty of questions during the pitch.

That said, businesses should build forecasts for 3-5 years to get a thorough context of a business’s financial position in the future.

Key 4: Detailed marketing and sales strategy

This aspect of a business plan details how to attract your target market and convert them into your customers. Readers, especially your investors will look after this section to ensure your great idea has a great market and marketing plan.

Kevin Shahnazari , the CEO at FinlyWealth , suggests using customer journey maps to develop a highly practical sales and marketing strategy. According to him, journey mapping offers insights into the needs, behaviors, and pain points of the customers that might not seem obvious on a surface level.

He reveals finding their best acquisition tool (educational content) by mapping customer journeys. This new acquisition channel increased their web traffic (70%) and organic leads (40%), and reduced their customer support inquiries (20%) within a span of 6 months.

Now, this is just one of the many examples of how you could develop your sales and marketing plan.

Focusing on the sales plan , here are a few points your sales plan should touch on:

• Sales goals
• Sales channels
• Sales tools
• Sales budget

Your sales plan should sufficiently explain how you intend to convert your target market into customers and retain them.

As for your marketing plan , outline how you will market your business to reach customers at different points of their customer journey.

It should include,

• Marketing channel
• Marketing budget
• Marketing tools
• Review process

Place a huge emphasis on your brand image and convey it efficiently as you build your marketing plan.

Key 5: Solid operational plan

This part of the business plan outlines the actionable steps the business will take to turn its vision into a reality.

It offers a clear understanding of the workflows, logistics, and resources essential to perform day-to-day business operations. It also highlights the team responsibilities, key timelines, and supplier relationships, offering readers a complete overview of how the business functions.

Moreover, a well-planned operation demonstrates your preparedness to the reader. It shows that you’ve thought about every business aspect and are well-equipped to run a business.

It doesn’t matter whether you create a fully detailed operational plan or a rough 2-page plan outlining your business processes. As long as the operational plan acts as a roadmap, it will ensure alignment between your team and the business goals.

The key elements we’ve discussed indeed contribute to building a successful business plan. However, these aren’t the only elements your business plan should cover.

From a concise executive summary to an insightful products and services section, and a direct funding plan—a complete business plan goes beyond the basics.

Now, let’s help you write a business plan that fits your needs with the Upmetrics . The guided approach and AI-powered functionality of this tool streamline your business planning efforts, helping you prepare a fully detailed business plan in no time.

Build your Business Plan Faster

with step-by-step Guidance & AI Assistance.

Frequently Asked Questions

What are the 5 key factors for success when preparing a business plan.

The 5 key factors influencing the success of your business plan are:

• Clear mission, vision, and values(MVV)
• Detailed market analysis
• Accurate financial forecasts
• Thorough marketing and sales strategy
• Solid operational plan

What is the most critical key to a successful business plan?

Market analysis is a key component of a successful business plan as it demonstrates your understanding of the market and preparedness to start a business. It guides your business strategy, product development, marketing plans, and future planning. It’s a fundamental that grounds your business plan in reality.

Can a startup use the same keys to success in their business plan as a large business?

The keys to success for a startup business plan are the same as a business plan for a large business. However, startups focus more on a lean planning approach compared to long-term visionary planning of large businesses.

How do I know if my business plan is successful?

In this rapidly changing marketplace, the success of a business plan is truly determined by its ability to adapt, adjust, and pivot. Rigid plans will turn redundant and eat dust off the shelves. If you want your business plan to be truly insightful and helpful, allow room for flexibility and adaptations.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

Get started with Upmetrics Al

• 400+ sample business plans
• Al-powered financial planning
• Collaborative workspace

Reach Your Goals with Accurate Planning

• Sources of Business Finance
• Small Business Loans
• Small Business Grants
• Crowdfunding Sites
• How to Get a Business Loan
• Small Business Insurance Providers
• Best Factoring Companies
• Types of Bank Accounts
• Best Banks for Small Business
• Best Business Bank Accounts
• Open a Business Bank Account
• Bank Accounts for Small Businesses
• Free Business Checking Accounts
• Best Business Credit Cards
• Get a Business Credit Card
• Business Credit Cards for Bad Credit
• Build Business Credit Fast
• Business Loan Eligibility Criteria
• Small-Business Bookkeeping Basics
• How to Set Financial Goals
• Business Loan Calculators
• How to Calculate ROI
• Calculate Net Income
• Calculate Working Capital
• Calculate Operating Income
• Calculate Net Present Value (NPV)
• Calculate Payroll Tax

12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

• The name and location of your company
• Products and services offered by your company
• Mission and vision statements
• Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

• Business location
• The legal structure of your business
• Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

• The geographical location of your target market
• Needs of your target market and how your products and services can meet those needs
• Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

• Industry description and statistics
• Demographics and profile of target customers
• Marketing data for your products and services
• Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

• Your competitors' identified advantages in the market
• How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
• The standout qualities that distinguish you from other companies
• Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

• Information about how your company plans to carry out its operations.
• The base location from which your company intends to operate.
• The number of employees to be utilized and other information about your company's operations.
• Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

• Projected income statements
• Cash flow statements
• Balance sheets
• Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

• Legal documents
• Licenses and permits
• Credit histories
• Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

• The management team and other stakeholders resume
• Marketing research
• Permits and relevant legal documents
• Financial documents

Was This Article Helpful?

Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.