The term “business plan” is used a lot, but when you actually sit down to create one, it makes little sense. Some people will give you useless advice about what elements you should include, what the format should be, etc. So let’s get read of all this confusion and try to understand what goes into it and how you can make the perfect business plan for your startup.

So what is a business plan?

A business plan is a document that contains all the goals your startup wants to achieve, how it plans to achieve it and in what time frame.

It’s like a roadmap for your startup, which provides directions and guidance on what’s going to be a bumpy ride. A business plan describes your startup, your target market, the problems you’re solving for them with your offerings, your marketing plan, your organizational structure and a few other things.

Writing a business plan is an opportunity to carefully think through every step of starting your company so you can prepare for success. This is your chance to discover any weaknesses in your business idea, identify opportunities you may not have considered, and plan how you will deal with challenges that are likely to arise. Be honest with yourself as you work through your business plan. Don’t gloss over potential problems; instead, figure out solutions.

A good business plan is clear and concise. A person outside of your industry should be able to understand it. Avoid overusing industry jargon or terminology.

Most of the time involved in writing your plan should be spent researching and thinking. Make sure to document your research, including the sources of any information you include.

Proofread your completed plan (or have someone proofread it for you) to make sure it’s free of spelling and grammatical errors and that all figures are accurate.

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Instructions: Executive Summary

The executive summary is probably the most crucial part of a business plan. You need to showcase your enthusiasm and the opportunity of your idea. Usually, investors and lenders decide whether or not to even consider your business plan just by reading your executive summary.

• Your executive summary should basically summarize your entire business plan.
• Write your Executive Summary LAST, after you have completed the rest of the business plan. That way, you’ll have thought through all the elements of your startup and be prepared to summarize them.
• The Executive Summary should briefly explain each of the below.
• A short description of your business idea and what your startup does (one or two sentences).
• A description of your product and/or service. What problems are you solving for your target customers?
• Your proposed target market. Who are your ideal customers?
• How you intend to reach and sell it to these ideal customers?
• Talk about your potential competitors and how your offering is better than theirs
• Your management team and a brief bio of your team.
• If you are a tech startup or a manufacturing company, make sure you include a description of your operational plan
• A brief overview of how much money you need and how you’re planning to spend it.
• Limit your Executive Summary to one or two pages in total.

Executive Summary

Instructions: Company Description

This section should explain the basic elements of your business. Include each of the below:

Company mission statement

A mission statement is a brief explanation of your company’s reason for being. For eg: YourStory’s mission has been to tell the stories of entrepreneurs that matter; stories with heart, with drive and passion.

Company values

As a company what are the values you want to live by? Honesty, innovation, teamwork, efficiency are some of the examples. You need to bring out the company philosophy here.

Company goals

Specify your long- and short-term goals as well as any milestones or benchmarks you will use to measure your progress. For eg: how many customers do you tend to have in the next 1 year and say 3 years. How many markets will you enter etc

Target Market

Although you’ll be talking about your target market in detail in the marketing section, you should briefly mention who your ideal customer is.

Industry

Talk about the industry as a whole and its short-term and long-term outlook. Is it a growing industry? What are the risks are involved in entering this industry?

After reading the Company Description, the reader should have a basic understanding of your business’s mission and vision, goals, target market, competitive landscape and legal structure.

Company Description

Instructions: Products & Services

This section is an extension of the previous one, but here, you need to showcase your product or your service and provide a clear description.Here are some things to consider:

Your product or service

What are you selling? How is it produced or delivered to your customers? Mention other stakeholders like suppliers and vendors who might be crucial in making your product.

The problem your offering solves

Specify the problem that your product or service solves. Explain what the problem is, how your competitors are solving it, and how your solution is better than anything else that is available in the market. Highlight the unique selling proposition of your company and how it gives you an edge over the competition.

Mention anything that is proprietary

Do you have a patent on your product or a patent pending? Do you have exclusive agreements with suppliers or vendors to sell a product or service that none of your competitors sell? Do you have the license for a product, technology or service that’s in high demand and/or short supply?

Pricing

Talk about how you’re going to price your product and how this pricing is going to help you attract customers, deter competitors and make good profits. If you have more products and offerings that you’re planning to build in the future, put down a roadmap of your product development.

Include any product or service details, such as technical specifications, drawings, photos, patent documents and other support information, in the Appendices.

After reading the Products & Services section, the reader should have a clear understanding of what your business does, what problem it solves for customers and the unique selling proposition that makes it competitive.

Products & Services

Instructions: Marketing & Sales Plan

This section provides details on your industry, the competitive landscape, your target market and how you will market your business to those customers.

Describe your customers

Give demographic information like age, gender, education, income, professions and location. You can also add in their motivations, interests and the challenges they might be facing.

Size of the market

You already have this number because it’s what you arrived at while building your financial model. Talk about the total size of the market and what share you can realistically capture. It’s also good to talk about how your market is growing and how you plan to reach this market.

Competitive landscape

Paint a picture of the competitive landscape here. You’ve already done your competition analysis so put down all your insights here. Also, talk about the barriers to entry that your existing and potential competitors might face. This can be in the form of technology and patents, government regulations, special skill sets, and so on. It would be wise to talk about the threats and opportunities here.

Marketing & Sales Plan

Instructions: Operational/Technical Plan

This section explains the daily operation of your business, including its location, equipment, personnel and processes.

Production

Talk about the infrastructure you need to manufacture your product or deliver your services. This could be the tech stack or equipment or the process that you need to deploy to deliver your offering to your customers.  Highlight how you’re going to consistently do this at scale without sacrificing quality.

Location

If your operations are location-sensitive, mention the types of locations where you will set up operations and talk about why it’s important to be located there.

Legal environment

If your venture involves any legal requirements like permits, licences, trademarks and any kind of IP requirements, make sure you talk about them here.

Personnel

Talk about your team – what kind of talent you need, and how many people you need. This is also a good place to explain on how you intend to find qualified staff or what kind of training you’ll give them.

Inventory & Suppliers

If your business requires inventory, explain what kind of inventory will you keep on hand, average value of your inventory,rate of inventory turnover. Also mention about your suppliers and vendors if any, their history and reliability, their payment terms etc.

Operational/Technical Plan

Instructions: Organisational structure and management team

This section should give readers an understanding of the people behind your business, their roles and responsibilities, and their prior experience. Include the following:

Bios

Include brief biographies of the owner/s and key employees. Include resumes in the Appendix. Here, summarize your experience and those of your key employees in a few paragraphs per person. Focus on the prior experience and skills that have prepared your team to succeed in this business. If anyone has previous experience starting and growing a business, explain this in detail.

Gaps

Explain how you plan to fill in any gaps in management and/or experience. For instance, if you lack financial know-how, will you hire a CFO or retain an accountant? If you don’t have sales skills, will you hire an in-house sales manager or use outside sales reps?

Advisors

If you have any advisors in finance, legal, HR and other areas, mention them briefly. Make sure you also mention your board of directors and any mentors you may have.

Organization Chart

Develop and include an organization chart. This should include both roles that you’ve already filled and roles you plan to fill in the future.

Organisational structure and management team

Instructions: Financial Plan

Lucky for you, you have already finished doing this. Don’t forget that the financial plan is one of the most crucial elements of your business plan. Lenders and investors are going to review this section in detail. Here are the things you should include

Profit & Loss Statement

Make sure you have a 12 month and a 3-5 year P&L projection handy. Be sure to explain the assumptions behind the numbers in your P&L. Keep detailed notes about how you came up with these figures; you may need this information to answer questions from potential financing sources.

Balance Sheet

A balance sheet gives an overview of the assets and liabilities of your business. Like the P&L statement make sure you have a 3-5 year projected balance sheet handy.

Cash Flow Statement

The last and final financial statement is the cash flow statement which basically tells you how much cash is going in and out of the business.

Break-even calculation

The break-even analysis projects the sales volume you need in order to cover your costs. In other words, when will the business break even?

Use of capital

If you’re using the business plan to seek financing from lenders or investors, provide a breakdown of how you will the capital and what results you expect. For example, perhaps you will use the money to buy new equipment and expect that to double your production capacity.

Financial Plan

Instructions: Milestones and metrics

You’ll notice that you’ve arrived at a lot of metrics when you’re drafting your business plan. And that’s a great thing. Your investors and lenders are going to be very interested in these metrics because it helps them feel the pulse of how you plan to run the business.

So include relevant business metrics that your investors can follow.

Include milestones for all your projects. Milestones will not only help you keep track of your progress but also let your investors and lenders do so.

Milestones and metrics

Instructions: Appendices

Don’t slow your readers down by cluttering your business plan with supporting documents, such as contracts or licenses. Instead, put these documents in the Appendices, and refer to them in the body of the plan so readers can find them if needed.