With around 45% of new businesses failing during their first five years of being in business, as a new business owner you need to make sure you cross all your “T’s” and dot all your “i’s.” The planning process is one of the most important parts of putting a business together. Before opening your business doors, you need to put plenty of effort into your business plan outline.
Writing a business plan can seem overwhelming at first, but we are here to help you out. We have put together this guide to share all the ins and outs of business plan outlines. Read on to learn more and feel more confident about being a new business startup.
One of the first things you need to do is draft up an executive summary. This is actually one of the more important sections of your plan, so at first it’s just a draft to get you going. Here you want to give potential investors and lenders a detailed and to the point overview of your business.
Writing up a successful executive summary will help persuade those potential investors to read further. Remember that this is just a summary so here you want to highlight the key points. Make sure that this executive summary is not longer than one page.
The key points to include are what your business does, what your business wants to do, what you sell, why your company is different, who you sell to, what you earn in revenue, how much money you are asking for, etc. Keep in mind that starting a business that needs financial backing will require you to answer all of these kinds of questions because people want to be sure that they can give you their hard earned money.
While you are writing up your company description you have to answer what you plan to do and who you are. This is the part of your business plan that shares what you have going for you and why it is smart to make an investment with you.
Bullet points that you want to include in your company description include:
- How your business is going to be structured (LLC, sole proprietorship, limited partnership, incorporated)
- The industry and niche your business is in
- Your business model
- Short term objectives
- Long term objectives
- Any helpful background information
The mission, value, and vision for your business will help you get into the core of why you are even opening up this business.
The market will either make or break your business, so you need to choose the right market for your products. Your goal should be to choose the right market for your products because the more customers need your product, the better. Choosing the wrong market will make you frustrated trying to get a sale.
When you start figuring out your market analysis you first need to understand your ideal customer. Look into how large the group is of the people you are targeting. Also, remember that this group age will become older over the next few years, so you have to plan for that as well.
You will also need to research industry trends that are relevant to your market and potential customers. For example, if you are marketing to retired people, you need to find data showing how many people will be retiring in the next decade and five years. You will also need to find data about their consumption patterns.
Keep in mind that it will be impossible to have perfect and complete information about the size of your total addressable market. As long as you collect as many verifiable data points as you can it will make it easier to make better estimates, so that you can be more confident.
You might want to consult industry associations, government statistics offices, academic research, and news outlets that are respectable and covering your industry when you are gathering your market data.
Who your ideal customer is, will play a major role in your marketing campaigns, so you need to give an overview of who this ideal customer is. This is where customer segmentation comes in handy. You need to make notes of things such as:
- Their age range
- Where they live
- Their highest level of education
- What their hobbies are
- Where they work
- How much money they earn
- Their beliefs
- Their values
- The technology that they use
The key is to be specific enough that anyone can see exactly who you are trying to reach. Everything about your target customer is based on what you’re selling. For example, if your product is geared towards college students then you have to make sure that you specify all the details about this person.
Next up you need to analyze your SWOT (strengths, weaknesses, opportunities, and threats). Your strengths are the best things about your company.
Examples of weaknesses are if you have a product that is fragile or breakable then your shipping will be more expensive. Another example of a weakness is that you personally do not have experience with managing teams.
Opportunities can be things like currently there is no market leader in the same niche or if you predict strong growth in sales because of the demand. A threat can be either something internal or external. For example, if there is a regulation needed for the product you’re launching then this puts you at the mercy of waiting.
Organization and Management
In this section of your business plan you will detail who is going to be running your company. This is where you will share more about the legal structure that you are planning on going with. Whether it’s a limited partnership, S corporation, or sole proprietorship.
If you plan on having a management team running your company then you need to use an organization chart to show the roles of each person, the exact structure, everyone’s responsibilities, and also what the relationship between the roles is.
Write down how every person on the chart will contribute to the success and end goals of your business.
Services and Products
This section will explain in detail about either the services or the products that your business will share with the world. If you have multiple products then you want to list each product and all the details about the product. Include details such as how much they will cost you and how much you will be selling them for.
You also want to share things like where the products are coming from.
The marketing section needs to outline decisions for your future and current strategy. This plan really needs to be based on who the ideal customer is that you’re speaking to.
If you are thinking of spending most of your marketing budget on the social media platform, Instagram, you need to ask yourself why? Is your ideal and target customer hanging out on Instagram?
Even if Instagram has billions of active users, what is the point of marketing there if your target customer doesn’t even hang out there? Details on the plan that you need to include are:
- Where you are going to sell your products
- How much your products will cost others
- How are you different from others in a similar or the same market
- Your plan to get your products in front of your perfect customer
Operations and Logistics Plan
You will also need to take the time to think about all the logistics and operations for your business. This is when you think about who is going to manufacture your products or if you are planning on drop-shipping your products. Part of the production is how you are going to handle a busy season or if a spike in product demand happens.
Something else that is part of this plan is your facilities. Think about where you are going to work and where your employees are going to work. If you plan on having a physical business location then you need to share where this will be.
Are you planning on handling all the fulfillment tasks via a third-party fulfillment partner or in-house? If you are planning on keeping inventory on hand, how much inventory will you keep? Also, where are you going to store it?
Does your business require you to have certain tools, programs, or equipment in order to be up and running? Make sure to include all the small details like computers, lightbulbs, etc.
The goal of this section is to show that you have a solid understanding of the supply chain and also plans in place in case of any uncertainties or contingencies.
The reality is that you will not have a business if it’s not making any money. This is why investors want to know that your projections show that they can expect you to be profitable in the future once you’re up and running.
The three major points to include in this section include an income statement, a balance sheet, and a cash flow statement. Income statements will give your reader a view of what your expenses are over a certain period of time and your revenue sources. When creating your business plan, you can project future milestones based on the research you have done of a comparable market.
Your balance sheet will share how much equity you have in the business. Make a list of all the things you outright own, these are all considered your business assets. Next, to that make a list of what you still owe money for and these are your liabilities.
Then you calculate the equity by subtracting the liabilities (money you own) from the assets (what you own). This equation can be written out as: Assets – Liabilities = Equities.
Last but not least, is your cash flow statement. This is comparable to your income statement except it doesn’t take into account when your expenses are paid and when your reveneues are collected.
If the cash you have coming in is more than the cash you have going out then your cash flow is good and considered positive. When cash coming in is less than what you’re putting out, then your cash flow is negative. The purpose of the cash flow statement is to help you see and make a plan for when cash is lower and on the negative spectrum.
Taking the time to forecast what your cash flow statement is will identify where there will be negative gaps, so that you can make plans on how you will adjust oeprations when this happens.
Feeling Like a Pro About Executing Your Business Plan Outline?
Now that you have learned the ins and outs of putting together a business plan outline, you can apply everything you learned above. Please keep in mind that taking the time to do all the work above is going to increase your chances of staying in business. One of our top tips when you are creating this business plan is to truly know who your audience is.
Also, make sure you have a crystal clear goal in mind and do not skimp on your research. Remember that no matter who it is you’re writing this business plan for, you want to keep it short and to the point. Usually, you don’t want to exceed between 15-20 pages.
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