Components of an ideal Business Plan-Market Plan, Financial Plan
1. Overall Summary of the Business Model
Without prior knowledge regarding what the business is supposed to do, an entrepreneur can’t achieve his or her goals.
The executive summary should define the overall details of what the business is all about and the goals and objectives.
It should be clear with the core values and the positioning in the market. It must clearly explain how the brand will enter the local market followed by the international market – if ultimate ambitions stretch that far. This can be done by maintaining its equipment base, input/output process and the good quality of items. It further focuses on the generation of financial resources.
2. A Strategy That Must Be Followed
You should be clear with your product strategy, which must be based on consumer needs. He/she should survey the situation using various details of their customers.
A few of the elements that must be included are:
- Company or product mission
- Marketing and Financial objectives
- Resource availability
- Cashflow analysis
- Competitive analysis
3. Availability of Products and Services
Entrepreneurs should have a full understanding of how their products or services will reach their target audience.
Designing good products and services to customers is just one part of the whole plan, however. The aim must be making it available that too in a cost-effective manner. And it should be the ultimate goal of an entrepreneur. It can be achieved by making the best use of the team, promotional activities used for sales, advertising methods and other tools that are being used for communication.
4. Pricing Strategy
The most important stage of any business model is its pricing. Price can be the maker or breaker of a product. It is the one element of the marketing mix that produces revenue. All other elements fall on the opposite side of the ledger. People should design their product or brand so that it commands a premium price and reaps big profits. It should also reflect a value that the consumers are willing to pay and a benefit that outweighs the cost.
5. Awareness of the Product
Always plan how you intend to make your product or service known to your intended customer base. You could have the best offering in your industry or niche, but if nobody has heard of it or you, you’re as good as sunk.
The time to plan your social media, content marketing and advertising campaigns is not when you are ready to go to market!
6. Who Will Benefit From Your Offering?
Segmentation, targeting and positioning are the essences of Marketing. Your target customer base will go some way to determining the price you can ultimately charge. It will also determine how you can best communicate your offering to them and where you will find them.
7. Short Term and Long Term Objectives
Entrepreneurs must have a clear vision of their mission, marketing and financial objectives. They need to be specific about how their brand will satisfy the target market. Nobody can expect immediate profit. But planning must include short, medium and long-term goals. You need to be clear regarding how your business will proceed as per the life cycle of whatever you are selling. And you need input from other areas of marketing. Nobody can think of or execute everything entailed in pushing an offering to market.
8. SWOT Analysis
Before designing a complete project, a pilot project needs to be designed and implemented. An entrepreneur should know everything – including any flaws that may become apparent. Also, the project strength, shortcomings, appropriate options for progressing and warnings can be tested in the pilot project itself for the successful completion or execution of the main project. For this, you need to do a thorough SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis.
9. PEST Analysis
SWOT Analysis will give you the inner view of the business model. However, it is very important to determine how a business will run in the changing economic scenario. Hence, a detailed PEST analysis needs to be done to know how your model will run in the changing Political, Economic, Social and Technological Environment.
The financial section of your business plan determines whether or not your business idea is viable and will be the focus of any investors who may be attracted to your business idea. The financial section is composed of three financial statements: the income statement, the cash flow projection and the balance sheet and a brief explanation/analysis of these three statements.
This article will guide you in the preparation of each of these three financial statements. Before you begin, however, you must gather the financial data you will need including all of your expenses.
Taking Stock of Expenses
Think of your business expenses as two cost categories; your start-up expenses and your operating expenses. All the costs of getting your business up and running should be considered start-up expenses. These expenses may include:
- Business registration fees
- Business licensing and permits
- Starting inventory
- Rent deposits
- Down payments on property
- Down payments on equipment
- Utility setup fees
This is just a sample of startup expenses; your own list will expand as soon as you start to itemize them.
Operating expenses are the costs of keeping your business running. Think of these as your monthly expenses. Your list of operating expenses may include:
- Salaries (including your own)
- Rent or mortgage payments
- Telecommunication expenses
- Raw materials
- Loan payments
- Office supplies
Once again, this is just a partial list. Once you have listed all of your operating expenses, the total will reflect the monthly cost of operating your business. Multiply this number by 6, and you have a six-month estimate of your operating expenses. Adding this amount to your total startup expenses list, and you have a ballpark figure for your complete start-up costs.
Now you can begin to put together your financial statements for your business plan starting with the income statement.