The 5 Key Components of a Business Plan

Great businesses need adequate planning and successful execution of those plans. It can take months to develop a viable plan from an idea because it involves considering every aspect of building an entity from the ground up. Since real-life testing of the concept requires enormous investment, it is better to assess it on paper with the help of a business plan. The document is the DNA of the venture and aids in making others understand the purpose, goals, products, marketing, operations, and finances of the business.

It is a prerequisite for running an organisation because every employee, including the entrepreneur, needs to refer to it. Those who intend to purchase a business for sale Melbourne also need to look at the business plan to understand it better and run it according to the proven policies and processes.

Thus, making an all-encompassing and inclusive document that details every aspect of the business is essential. Also, ensure that you do not forget to include the critical components in the plan to make it robust, feasible and practical. So, here are the five main sections that need to find a prominent place in the document.

1. Executive Summary

The executive summary is the synopsis of the story you wish to tell through the document. It is the crux of the plan and offers a peek into what the business is all about and what is coming next. Many investors and moneylenders who are pressed for time may only read the first section and skip the rest of the document. The first part of the business plan can be written at the end when you have spent a reasonable amount of time explaining the other sections. Thus, making it interesting, compelling, and complete is vital.

It must offer a summarised version of the organisation’s objectives, its purpose, and the gap it will fill in the market. It must include the vision and mission of the company, its long-term goals, and the products and services it will provide its customers. Also, it should have a brief description of the target audience, the competitors and the marketing strategies utilised for brand building and promotion of the products. However, it should not include lengthy details and must be briefly written.

2. Business Overview

The next section covers the business overview, which explains the reason behind the existence of the business and its ability to meet the needs of the target audience. It must describe what the business is about, what it is doing, what it wants to achieve and how it will achieve it. Thus, you will have to define the business model, legal structure, industry and sector, customers, products and services, and its unique selling proposition.

Since this is a detailed part of the plan, you need to include finer aspects of the subject, such as the competitive strategy needed to create brand equity, differentiating factors from other similar businesses, patents and trademarks required to run the business, manufacturing of the products, inventory management, etc. Thus, the reader must know about every department through this description, ranging from administration to operations.

3. Sales and Marketing

Marketing products and services to generate sales ensures the business's survival. Thus, entrepreneurs need to pay attention to preparing a sales and marketing strategy that allows them to position their brand in the cluttered market and enjoy healthy competition with other brands. This section must explain the size of the market the business owner intends to penetrate and its opportunities and challenges.

It requires thorough market research and creating a buyer's persona for the marketing plan. It must have details about their needs and wants, the media they consume, and demographics and psychographics. It will help in devising the marketing strategy to influence the buyers.

This section should provide a clear understanding of the advertising and promotional techniques that will be employed to evoke interest and desire in the audience, the communication plan to inform the customers about the product features, the design elements, and brand positioning. Also, the entrepreneur needs to identify the media channels that will be used in the process and the budget allocated to the entire task.

4. Management and Organisation

The management and organisation of the business are dependent on its people and processes. The efficiency of these two elements ensures high productivity and growing profits. So, you need to put down the organisational structure in this section of the business plan and mention the daily operations for every department, team and manager. It will define the tasks related to production, administration, inventory management, customer relationship management, dealing with suppliers and complying with the regulations.

The business owner will mention all the important positions and roles in the business and their responsibilities to achieve the goals. The process of monitoring the performance of the individuals should be included in this section to ensure effective control and supervision. This part will also explain the salary structure, incentives and benefits, and payroll management, which aids in keeping the workforce motivated.

5. Financial Projections

Finance is the soul of the organisation, and it needs to be managed professionally and wisely to ensure success. Several businesses fail because they are not able to maintain a positive cash flow. Thus, you must hire an accountant or a bookkeeper to help you forecast the financial needs of the business for the first three to five years.

They will use their industry knowledge, market research and your calculations to determine the incomings and outgoings during the introduction stage of the business. Once the business is established, these financial projections work as the benchmark for the accountants to measure the performance of the entity. If you are buying a business for sale in Melbourne, you can check the financial projections to determine the profitability of the venture.

This section must include a clear picture of the capital requirements at every stage of the business lifecycle, which includes the initial cost, logistics, personnel, management, production, etc. Also, it must predict the break-even point and create a cash flow forecast.

Conclusions

Every business needs to have a business plan that should be created after deliberation and meticulous research. It must involve the suggestions and analysis of your accountant, lawyer, mentor and advisor to make it failsafe and effective.