Every business needs a business plan. Whether you are just starting out or need financial investment, or are looking to raise capital and expand your business, a good business plan is a must. A well-written business plan is not only important for your investor pitch; it can also help you articulate what it is you hope to achieve with your business-your goals, values, mission, and the company's growth trajectory.
However, most entrepreneurs, when drafting a business plan, tend to forget the key elements needed to make the plan successful. Here you will learn about the crucial elements you should not forget to make your business plan a winning and complete document.
Eight crucial components in business plans that are easily overlooked
1. Executive summary
The executive summary is the most critical and most read section of your business plan. It should be at the front of your document, but it's mostly advisable that it be the very last part you write. The summary should be brief and businesslike, probably no longer than one page. It is the space where you will present all the key elements surrounding your business.
The statement should outline the four "W" s (What, Why, Who, and Where) as well as the mission statement. Write about why you started the business, where you would like it to be in the future, why your customers will be interested in your business, why your business will succeed, and what measures you will take to get there.
2. Competitive analysis
This is a statement of the business master plan and how it relates to the competition. Most people forget to include this in their business plans, but it is one of the most important components. Strategize on how to beat your competition by first identifying the current and potential competitors, grouping the competitors according to their competitive strategies to understand what motivates them, and determining your unique value factor that makes your business different.
3. Cash flow analysis
One of the most common mistakes first-time business owners make is focusing on profits, not cash. Understanding that businesses spend cash and not profits is a piece of critical information in your business plan. Thus, it is always good to have a solid understanding of your cash flow and clearly illustrate it in a graph or table.
4. Market psychology
Your market psychology should strictly be based on logical findings and research. The market analysis proves that you know the trending ins and outs of that particular industry and the specific market you intend to enter. When you discuss the statistics and data in this section, use colored graphs and spreadsheets to showcase your insights.
You can also make a smart move and write about your customers' mindset and emotional problems and needs that your proposed product will solve.
5. Clear, measurable business goals
For your business plan to succeed, you should be able to clearly articulate your goals measurably. Instead of saying, "I want to run the most successful ice cream shop in town," which is not measurable, you can say, "I want to serve 10,000 new customers in 2022." This also makes it easier to hold yourself accountable for goals associated with a specific quantity or time frame.
6. Ask "What if?"
When developing your business plan, it makes sense to brainstorm "What if?" scenarios, especially when it comes to a company growing fast. This long-range thinking will give your investors confidence that you can be able to manage a fast-growing company, come what may. For example, what if your website traffic increased ten times, or what would be your plans if you got more orders than expected?
7. Exit strategy
To get venture capital investment, you will need to have a well-researched and detailed exit plan. Most venture capitalists or investors want to know that you are thinking about a liquidity event-how and when they can cash out of your startup. They want to see a return of ten times the initial investment. Identify your preferred exit strategy, including particular candidates for sale or merger, and time frame.
Another alternative would be to go public. All this is to show how your rate of return would be attractive to your investors.
8. Examine your document
Spelling, grammar, style, and punctuation are all important when it comes to getting your business plan on paper. This would seem like it's not a big deal to the investors, but you should be aware that they are always looking for clues about the underlying business and its bosses when perusing the business plan.
Before you submit your plan, go through every single line personally. You can also have a friend or business associate proofread it to avoid any minor mistakes. A small typo can create a negative impression on your investor's minds about your professionalism and startup idea.
Writing a strong business plan can feel like a daunting task, but with the right resources, research, and help, you can implement it in the right way. You should also remember that a business plan is a useful roadmap that will help you stay on track based on your business objectives and goals.
At PS Group, our mission is to guide startups and established companies through their journey to success focusing on the generation of revenue, margin, and reach. Our skill sets are also managed to guarantee that your business is ready to adopt our projects. Contact us for further questions and to learn more.