As any founder knows, the only sure thing about running a growing company is change, and the thing that will change most often will always be your business plan. However, be it for raising finance, understanding the underlying processes of the business or planning your budget ahead, a good business plan still has to be prepared (and updated).
Different companies require different types of business plan, depending on your financial model, your revenue structure and many other factors, but there are 5 elements of a business plan that are indisputably important and should be well thought-through in any case.
1. Executive Summary
This represents the first impression that the reader will get from your plan. It should include key facts about your business (business concept, financial requirements, current positioning, major achievements…) but most importantly it should contain the key message for the reader (i.e. what you want from them).
2. Business Overview
After the executive summary, a business plan usually starts with a description of the industry where your business fits in. This includes its present outlook and its future direction, data on similar products in the market in order to provide the reader with in-depth understanding of the industry, with reliable sources and references.
When describing your business, make sure that its structure is clear. Explain who are your customers, what are your distribution channels, what problem are you solving and what systems you are putting in place to support your operations.
Finally, use this section to give the reader some details about your core products or services. Obviously, as in the whole plan, keep it as short as possible. But still make sure that there is enough information to understand where your competitive edge lies. Possibly, explicitly specify how your product is different from the existing ones, and how it could be more successful.
3. Sales & Marketing Strategy
This section requires a deep understanding of your market space and of the position of your business within its niche. The strategy should include a definition of your overall market and your projected market share, a description and profile of your customers, a detailed positioning and pricing strategy, an overview of your distribution and promotion infrastructure, sales forecast and competition analysis.
4. Operations & Management
By planning how to run the day-to-day tasks involved with your business, you should encompass two main sections:
Organisational structure: this is an overview of all the people involved in your business and their position in relation to each other. It is also often used to predict salary costs, which are usually the highest operating expense of a business, so be careful when estimating how much staff you will need in your company.
Capital and expense requirements: this is a summary of all the expenses for big purchases and day-to-day running costs, which should give the reader an idea of how much will it cost to run your business.
5. Financial Information
Including a detailed overview and forecasts, usually obtained through financial modelling, will help you communicate to your investors that the management team has a clear vision and full control on the business, and that it is prepared to face different scenarios.
Remember, these are just tips to adjust the form of your plan, but you can never do without a good product, an efficient business model, and maybe most importantly, the flexibility and adaptability to change. You can be sure that something will come up at some point that you did not include in your business plan, and being able to respond to such change is key to running a successful business.