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June 16, 2022
A business plan is a document that outlines how and why a new business is being formed. While creating a business plan is not a requirement, it is highly recommended because of the benefits it confers.
For example, an effective business plan can help entrepreneurs achieve better results from their marketing and funding initiatives, as well as help them avoid costly mistakes. The act of writing one can also help founders recognize potential hurdles that aren’t otherwise obvious.
To attract investors or lenders and target a scalable market, a business plan should be as factual as possible so they understand the risks. It can also help employees to better understand your company’s goals.
Explain your business idea with a clear and factual description. Then, describe your company’s vision and mission, the objectives you want to achieve, proof of viability and growth potential, and funding requirements.
Next, explain the problems that your business will solve, and clearly describe how you’ll solve that problem to make a profit. In other words, outline what you plan to do, how you plan to do it and how you will succeed.
Provide the following information:
The products and services section of your business plan should elucidate:
If applicable, also use this section to elaborate on:
Intellectual property: List any patents, copyrights or trademarks owned or licensed by your company in this section. However, aim to do it using straightforward language without using industry buzzwords or becoming too technical.
Competitive advantage: If you plan to purchase products from suppliers or wholesalers readily available through several outlets, highlight this competitive advantage.
Provide analyses of your customer demographics, purchasing habits and willingness to adopt new products and services. This section should help readers understand the opportunities for your business in your target market by providing details like:
Effective marketing can increase your brand’s value and attract potential customers, in turn generating higher sales or profit. Your marketing strategy should set you apart from competitors by highlighting the benefits your customers will receive. If you plan to distribute products to other companies or suppliers, you should also explain your distribution strategy here.
The marketing section of your plan should answer these key questions:
The competitive analysis of your business plan should inform readers about how your business is different from its competitors. You can evaluate your competitors by gathering information about their products, services, quality, pricing and marketing campaigns.
To compile this information, check their websites and marketing materials, visit their sites, assess their marketing strategies and search the internet for their news, reviews and recommendations.
To stay ahead of competitors, stay up to date on news about your industry, about related products or services, and about your target market — and don’t forget to assess your competition regularly. Doing so keeps you apprised of your competitors’ strengths and allows you to take advantage of any weaknesses, such as price, service or convenience.
Make sure your competitive analysis addresses:
In this section, describe the strategies you’ll use to manage and operate your business on a day-to-day basis. Inform your audience about these aspects of your business operations:
Many lenders weigh the skills and experience of the management team when evaluating a new business’s potential. Defining your management team, or presenting an organization chart in your business plan, will inform readers about leaders in key roles, including their experience, educational background and skills. It should also explain the responsibilities to be performed by each leader.
This section of the business plan should describe the company’s cash position, including assets, liabilities, shareholders and profit retained to fund future operations or expansion. Financial projections and analyses further help investors or lenders evaluate its potential.
Provide details about sources of income and fixed and variable expenses to help your audience further determine whether your company can become profitable during a given time period under specific conditions.
Since 2006, Escalon has helped thousands of startups and midsized companies to accomplish their business objectives with our outsourced solutions for accounting, HR, payroll, insurance, and recruiting and taxes — and we can help yours too. Talk to an expert today.
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