The Most Essential Elements of a Business Plan

Feb 13, 2020 5 min read

A business plan helps you think strategically about how you’re going to meet your business goals. While it may be tempting to just dive into building your business, make sure you spend time planning. No matter the stage of the business or experience of the team, a well-developed business plan provides structure and outlines your vision for success. These are the essential components of a business plan you should include in yours.

Executive Summary

The executive summary is an eagle-eye view of your business. It should reflect the structure and content of the rest of your plan but be able to stand alone if needed. It’s like a trailer for a movie — it should entice your audience and share the very best pieces of the whole. You may want to write this section last so you have a complete picture of what the rest of the document will be. 

Consider including:

  • Your mission
  • A brief overview of each section of your plan, focusing on your highest priorities
  • An explanation of your company’s viability and growth potential
  • A summary of your plans, including your next steps and what you critically need to be successful

Company Overview

The company overview is an opportunity to share what inspired you to create your business, who you have on board, and what resources you have in place. This element of your business plan can help you connect with your audience on a more personal level. 

Consider including:

  • The history of your business and the inspiration behind your drive to create it
  • An overview of the company’s leadership and employees, including notable community members who are already on board with your business
  • Information about your location and operations that might be of interest to the public

Products or Services

The products/services section tells the reader what it is your business does. Paint a picture of the problem that you’re solving and tell your reader how you’re solving it. Include enough details to show that you’ve clearly thought things through but avoid too many specifics or technical jargon that might break the reader’s concentration or interest. 

Consider including:

  • A description of the products/services and the value they bring to the customer, including how they are different from competitors’ products/services
  • A brief overview of the production and/or procurement process and timeline of bringing your product/service to life
  • An outline of your vendor relationships
  • Pricing and lifespan/longevity of your product/service
  • Any patents or proprietary technology
  • Continued plans for research and development or growth (if applicable)

Market Analysis

The market analysis gives the reader an overview of your industry and explains how your business will stand out in the market. Add this element to your business plan to drill down on the importance of what your business offers.

Consider including:

  • A market and industry overview, including size, volatility and growth potential
  • A description of how your products/services are unique amongst your competitors
  • A SWOT (strengths, weaknesses, opportunities and threats) analysis
  • An overview of your top competitors, including their strengths and weaknesses
  • Industry trends that will work in your favor or that you will have to contend with

Marketing Strategy

Your marketing strategy describes your brand — how you are perceived in the market — and how you use that to sell your products/services. If your business is more established, you could include focused sections, such as entering new markets, introducing a new product/service, boosting sales of a particular product/service, cross-selling, etc.

Consider including:

  • A detailed description of your target market. Who are your intended customers? How big is this market? What is their spending power? What do they consider when making decisions about purchases similar to your products/services?
  • An overview of strategies your competitors have used (successfully and non-successfully) and what you can take from these successes or failures
  • Strategies to promote your business and reach your target audience using various channels, including but not only social media. You should also include definitions of what success looks like for each strategy and channel
  • A plan for building customer loyalty

Goals and Objectives

A goals and objectives section gives you a place to use all the research you have built up to create goals, objectives and tactics for succeeding in those goals. It is essentially the “next steps” section of your plan. This is also where you would include a funding request for the next 3-5 years if appropriate for your business and your audience.

Consider including:

  • SMART goals (specific, measurable, attainable, relevant and time-bound)
  • Objectives (or sub-goals) that will help you track progress toward your main goals
  • Tactics to help you achieve each goal
  • The support you need to reach these goals

Financial Analysis

Your financial analysis is the overview of the financial health of your organization. This section of your business plan should include both the current situation and the projected future finances. You can be aggressive with these projections as long as they are realistic and justified — have you looked at the potential risks and determined a strategy to minimize those risks? Have you taken into account the hidden costs of starting a business? How do these projections compare to competitors?

Consider including:

  • Your current budget
  • A few ratios that demonstrate the financial health of your business (such as a common size ratio, a current ratio, a quick ratio, and an inventory turnover ratio)
  • Any relevant tax information
  • Your sales targets and financial projections

Best Practices for Your Business Plan

Your plan should be concise: no longer than 15-20 pages — and, in some cases, can be just a page. You are focusing on the key information — you can get into the details in your internal documents. Even in a full-length business plan, longer elements that you might want to include, such as a patent application, can be added in the appendix. A short version, such as a one-page plan, still requires you to think through each component of your business plan and make a compelling case.

Have other people read your plan. They can often see things that you aren’t able to — a fresh set of eyes may catch a typo and someone outside the planning process can point out areas where you need to add detail or clarify.

Be flexible — keep revising your plan. This isn’t a static — it’s meant to grow as you and your business do. At the very least, review your plan annually to record accomplishments, changes, and the ways that your trajectory has shifted in the past year.

A business plan is no substitute for a great idea, experience, business insights and the proper protection. Talk to your Farm Bureau agent today to make sure you have the bases covered before launching your business.

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