Main Components/Parts of a Business Plan

Various Components of a Business Plan

Let us discuss each of the components of a business plan in brief.

i.Summary: The first page of a business plan is summary. Summary should be concise and should cover all the essential details because the first page of a book only encourages a reader to continue reading the book. The summary should include the following points in brief:

•  Company’s / Business’ description
•  Company’s / Business’ objectives
•  Company’s products/services
•  Competitors and market profile
•  A statement which defines why and how the business will succeed
•  Projected growth for the company
•  Key management team
•  Funding requirements, time-line for the funds and how the funds will be used

ii. Vision: Vision statement and milestones is the second main component of a business plan. Vision statement should give a clear mental picture of the business/company owner about his business dream. Milestone should also be given to define the goal and the method to achieve the goal.

iii. Market and Competitive analysis: Market research data should be added to the business plan because investors like to invest money in a business which has a team with thorough knowledge of the market. Market analysis section involves:

•  A general description of the market a company (businessman) is willing to enter.
•  Changes in the market
•  Different market segments
•  Market segments and customers
•  Customer characteristics and needs
•  Customer buying decisions

Competitive analysis involves the detailed analysis of competitive strengths and weaknesses of you and your company. This section should explain:

•  Industry overview
•  Nature of the competition
•  Industry changes
•  Primary competitors
•  Competitive products/services
•  Opportunities
•  Threats and risks

iv. Marketing Strategy: After doing market and competitive analysis the next step is to define the strategy which you will be using to target the market and distribute your products/services. This section should explain:

•  Key competitive capabilities and weaknesses
•  Strategy that will be used by you
•  Implementation of the strategy

v. Products/Services: This section explains the products/services offered by your company or what do your company intend to offer. Provide details about the need of your product in the market. This section should contain:

• Description of product/ services
•  Positioning of product/services comparative to other competitors
•  Future products/services, your company willing to offer Development of Business Plan

vi. Marketing and Sales: Marketing and sales section contains following points:

•  Marketing Strategy that will be used by your company
•  Sales tactics that will be used by your company to sell its products/services
•  Advertising media that you will use to advertise your products/services like TV, newspaper, radio, hoardings, leaflets, handbills etc.
•  Promotional campaigns, if any
•  Publicity and trade shows, if any

vii. Operations: Operations involves the things required to implement the business idea. Operations section should explain:

•  Human resources plan
•  Delivery of product/services:
•  Customer service
•  Facilities provided by your company

viii. Financial Plans: Financial details should include the following points:

•  Balance sheets – which indicates the owner’s equity and your financial position
•  Profit and loss statement – alternatively known as income statement, indicates your company’s cash management
•  Cash Flow statement – details all cash receipts and disbursements.
•  Some key ratios for the projections that are made by you for the next few years