What should you include in a business plan?
Financial planning is essential to building a successful business.
A business plan serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing.
7 key elements of a business plan
A good business plan should contain the operational and financial plan of a business, and detail how your objectives will be achieved. It needs to outline the resources needed, the team and resource budgets as well as any risks you might face.
The 7 most important elements you need to include in your business plan are:
- Executive summary: This provides a summary of the entire business plan. It should be short and to the point, and capture the reader’s attention.
- Industry overview: This provides information about the specific industry your business operates in. This can include major competitors, industry trends, and estimated revenues. What is your company’s position in the industry?
- Market analysis and competition: This area goes into more detail about the target market for your company. This confirms your business understands the market and that there is a demand to support your proposed business model.
- Sales and marketing plan: This details how you plan to sell your products or services to your target market. What is your unique selling proposition? What channels will you use to sell and market your products or services?
- Management plan: This is an outline of the company’s structure, the management team and whether you require any internal or external human resource. It should list the number of employees required and their proposed salaries. It should also include any external professionals required, such as lawyers, consultants and accountants.
- Operating plan: You now need to go into more detail about the physical requirements for you business. This will include office space, machinery, labour, supplies and inventory.
- Financial plan: This will often determine whether the business will obtain financing. It is the area that quantifies everything mentioned in your business plan so far. It should include a projected profit and loss statement, balance sheet and cash flow.
Other areas of business planning
- Financial projections may be required for short term cashflow forecasting or as part of corporate transactions.
- Scenario analysis is a process of examining and evaluating possible events or scenarios that could take place in the future and predicting the various possible outcomes. These scenarios can be applied to the financial projections to estimate changes in value or cashflow.
How we can help
Our experienced team of advisers can assist you with the various elements of business planning and forecasting. For more information, please get in touch with a member of our Business Services team on 01903 234094.
A version of this blog originally appeared on the website of PrimeGlobal member firm, Henderson Loggie.