Learn about the critical features of a Business Plan Outline and 9 points to guide you to write a good business plan for your next venture.
If you want to own a business, then you need a business plan.
“But some entrepreneurs succeed without a business plan?”
You’re probably thinking, and you’ll be right.
Some entrepreneurs happen to have good timing, business skills and not a little amount of luck.
These make them be successful.
However, the odds are not in your favor if you want to go this route.
Now, let’s be clear.
Having a business plan does not automatically guarantee that your startup will succeed.
But in most cases, the ability to plan makes the difference between success and failure.
This is where a business plan comes in.
Writing a good business plan forces you to critically examine your business.
You’ll recognize the weak points and figure out how to reinforce them.
As an entrepreneur, you should do everything you can to tip the scales in your direction.
In this article, we’ll share how a business plan outline looks like.
And take you through a step by step guide on how to write the perfect business plan.
Table of contents:
What is a business plan and why do I need it?
Business Plan Outline: 9 Points For A Good Business Plan:
Before we jump into it, though.
Here’s something you need to know about writing a good business plan.
A business plan is not a fantasy!
Many starting entrepreneurs simply view their business plan as a tool.
A tool filled with a lot of projections and strategies.
Oftentimes, in hyperbolic language.
They write the business plan in the hope that it will convince investors or other lenders to give them money.
That’s one of the worst mistakes you can make.
Your business plan must first convince you that your idea makes sense.
This is because you are going to be investing a lot into it.
Not just in monetary terms, but your time and efforts too.
So, your business plan should be your roadmap to building a successful business.
Can you write down a plan that shows the roadmap of how you plan (not hope) to succeed?
Is it honest and articulate enough?
Then you have a greater chance of succeeding.
Your business plan can be useful in convincing investors to lend you money.
It can also help you attract employees to work with you.
It could also be what you need to get a joint-venture deal with another company.
But more importantly.
It needs to convince you that you have a chance of succeeding in the business.
Without further ado, let’s take a look at the 9 points you should know for a good business plan.
#1 Executive Summary
The executive summary is a brief outline of your company’s goals and purposes.
Typically, the executive summary is between one or two pages.
To write a good executive summary, you need to include:
- A short description of the products and services that you offer.
- A brief overview of your company objectives
- An in-depth and solid description of your market.
- A factual competitive analysis. (You need to justify why your business idea is viable by looking at your company and your competitive advantage.)
- A quick look at the growth potential of your company
- A brief of the funding that you’ll need (or already have)
While this might seem complicated, it’s absolutely critical that you get it right.
Many times, the executive summary is where anyone reading your business plan decides whether to keep reading or not.
The entire reason why businesses exist is to solve problems.
If your summary cannot state the problem you want to solve.
Then your business idea may not be viable.
It should also state how you want to solve the problem while turning a profit.
That, or it’s not developed enough.
When writing your executive summary, don’t try to “overhype” your business.
Instead, focus on communicating with a busy reader.
Tell them what your business is about and what you plan to do.
Ensure that your summary also states explicitly how you plan to implement your plan and succeed in doing it.
Your executive summary helps you do the following:
- Refine your concept: Think of the executive summary like an elevator pitch, albeit with more detail. In your summary, you describe only the highlights of your plan and include only the most critical point. You’re expected to leave out factors that are of lesser importance. As you begin to develop your summary, there’s a natural tendency that you focus on the issues that contribute the most to success. However, you need to avoid your concept being too complicated, fuzzy and broad. Your business should take a few sentences to describe and not several pages.
- Show Your Priorities: Your business plan should work the reader through the stages of your plan. You should be able to show how the various aspects of your plan are ranked.
Are you prioritizing product development and research over selecting the right location? Are you more focused on hiring the right kind of people and creating strategic partnerships?
By pointing out what you are focused on, it gives your reader a sense of what to expect.
- Use as an Outline: Once you’re done writing your summary, you can easily use it as an outline to create the rest of your plan. All you need to do is flesh out what you highlighted in the plan in more detail.
#2 Business Overview and Objectives
The business overview can also be called the business description.
Basically it gives the reader the information about the kind of business that you’re starting.
It includes the specific problem that your services and products solve.
It also talks about who your most likely buyer is.
Writing this section of business plan outline can be quite challenging.
This is because you have to merge what your business is with what you want it to become.
To write an engaging business overview that captures the right objectives, here are a few questions you need to answer:
- What product or service do you provide
- What would you need to run your business
- Who are your customers
You will also need to provide an overview of the industry that you are entering into.
This includes the industry trends, major players there and estimated sales.
In this section, it’s important to provide a brief overview of the place your business will occupy in the industry.
You should stress your competitive advantage.
As well as you and your team’s areas of expertise.
You should start by identifying your industry and your customer.
Then move on to explain the problem that you solve.
Finally, you’ll explain why you’re better than your competitors in a nutshell.
#3 Market Analysis
This section of your business plan outline is crucial.
It helps you identify the customers or clients that are the best fit for your business.
When analyzing the market, research the primary market that needs your product or service.
Highlight all sorts of information about them.
This includes their geographic location, their demographics, their needs and how they are currently being met.
Some of the questions that you should be asking are:
- What is the market size? Is it a stable, growing or declining market? Is the industry as a whole growing or in decline?
- What market segments are you targeting? Obviously don’t forget everybody at the same time so you need to segment your market. You should indicate the demographics and behavior that make up the market segment that you are targeting.
- Is there a demand for your specific product or services? Your business can only succeed when there is adequate demand for the service or products that you offer. So you need to determine if the demand for your services and products is increasing or not.
- How are you different from the existing solutions? More often than not, you will not be the only player in your industry. Therefore, there needs to be something about you and your business that differentiates you from every other competitor in the industry.
- What do I expect my customers to pay me for my products and services? The way your business is positioned will determine how your customers pay you. Is your service considered a commodity or is it individualized?
The goal of market analysis is to have an in-depth and thorough knowledge of the people you’re trying to sell to.
This knowledge allows you to make informed predictions about customer behavior.
This also predicts how your sales may be.
#4 Competitive Analysis
In this section of your business plan outline, show how successful your direct and indirect competitors have been in the marketplace.
You should also assess their competitive advantage.
So that you can state how you will differentiate yourself from them.
Every business has competitors.
You need to understand the strengths and weaknesses of your competition.
Otherwise, your business might not survive or grow.
In this analysis, you should state any barriers to entry that exist in the industry.
Be clear about how you plan to overcome such barriers.
State how you’ll distinguish your business from other businesses.
This is extremely important when securing funding.
Because you have to prove that you can compete in the marketplace.
In analyzing your competition, you should look at companies that are targeting the same demographic as your startup.
You then need to observe their strengths and weaknesses.
Also, analyze their marketing strategies.
Then, use this information to design how you want to take their market share.
#5 Sales and Marketing Plan
This section of your business plan outline should provide clear insight into your sales plan, your pricing plan as well as any advertising and promotional activities.
Your marketing is not just advertising.
It is an investment to grow your business.
Any investment you make should turn a profit for your business.
Thus, you need to be smart about your marketing
This section of your business plan outline should also highlight your unique selling proposition.
Your value chain (that is, how your products and/or service will move from raw materials to the market and the final consumer.
Specify how you are going to market your goods to your customers.
To persuade them to buy from you.
#6 Operations Plan
In this part of your business plan outline, you will give information about how your startup will be run.
You’ll need to give a description of the physical location of your business, as well as all the facilities and equipment needed.
You’ll also need to describe the kind employees, inventory and suppliers that your business needs.
Chances are, you are already familiar with the operations process of your business.
To create an operations plan, you need to answer some questions:
- What are the facilities, supplies, and equipment that you need?
- What organizational structure does your business need?
- Do you require some research and development in your business? Is it going to be a continuous thing or is it just for the start-up phase?
- What number and type of staff do you need?
Your operations plan should answer all these questions.
Not forgetting any questions that are specific to your business or industry.
#7 Financial Plan
To keep your business running, you need to continuously make a profit.
And to do this, you need to have a good grasp of your current finances, funding needs as well as projected revenue.
It is also in this section that you’ll describe the type of funding that you’ll need.
Included in this section should be your detailed financial statements and their analysis.
There are 3 main financial documents that your financial plan should present:
- Your income statement.
- Balance sheet
- Cash flow statement (or cash projection if you are a new business)
#8 Management Team
Your business can only work when it is run properly.
That is what the operations section in your business plan outline is about.
It outlines all the legal structures and management resources that need to be in place for your business to run efficiently.
The resources may include your internal and external management resources as well as human resource needs.
You should also state the specific skills and experience that each member of the management should bring to the business.
If you are writing a business plan outline to get funding.
Consider including an advisory board in your business plan as a management resource.
#9 Appendices and Exhibits
These are added to each of the sections that you have written.
They appear at the end of the business plan.
Include any additional information that will establish the validity of your business idea.
This can include things like marketing studies, permits, pictures of your products, or other intellectual property rights.
So, there you have it.
9 points to create a good business plan.
Of course, you may find that your specific industry requires some additional information that may not be covered here.
Not to worry though.
There are only a few cardinal rules to a business plan outline.
Thus, you can tweak your plan to meet the demands of your industry.
In case you are reading this guide and wondering if it’s worth to start a business.
Read our earlier – Is starting a business worth it?
You’ll have several of your questions answered.
Don’t forget to share your views on writing a business plan in the comments section below.