13 Essential Elements of A Winning Business Plan Every Entrepreneur Should Know

Imagine a school bus driver embarking on a field trip to a newly discovered tourist site in a different region, for the first time without a map.

You can think about the stress and inconveniences he is bound to run into since he has no tangible direction to the set destination.

His case is not different from the entrepreneur who has viable and good business ideas but lacks the blueprint to direct and coordinate his dreams into reality.

A good business plan does not assure 100% business success automatically. However, the benefits outweigh the disadvantage of not having one for your business.

A good business plan does not assure 100% business success automatically. However, the benefits outweigh the disadvantage of not having one for your business.

What then is a business plan?

A business plan is a written summary of an entrepreneur’s proposed business venture, its operational and financial details, its marketing opportunities and strategy, and its managers’ skills and abilities.

This written summary serves as a tool for realistic and systematic evaluation, determining the major risks, a game plan, and a map for managing the business successfully, and a vital tool for attracting capital from investors and lenders for startups.

Ultimately, entrepreneurs find the actual value in the process of writing the plan and not the plan itself. The process assists the entrepreneurs to explore all aspects of the business thoroughly through idea assessments, feasibility analysis, and development and testing of business models.

13 Essential Elements of A Winning Business Plan

1. Title page

This is the first page or the cover of the entire business plan. Therefore, the name of your business, logo, address, and contact details of the founders should be seen on the title page. It officially introduces you and your business entity to your prospective investors and lenders.

2. Table of content

People who read the business plan appreciate the table of contents. It easily assists them to navigate specific areas and pages of the plan. With sections and their respective page numbers, readers find it easy to identify sections and areas of interest to them.

3. Executive summary

Assuming you only have three minutes to pitch your business plan to an investor you met in an elevator, who is ready to fund your business ideas, what will you say? The answer is your executive summary.

It is a concise, succinct, and short summary of the entire plan which covers the basic business models, problems the business is solving for it customers, target markets, financial highlights, and owners and key employees. Although it is needed in the early part of the plan, it is prudent to write the summary after all other components are considered.

4. Vision and Mission statements

The purpose and direction of the business are described in the vision and mission statements. While the vision states where the company wants to be in the future, the mission statement describes what business the company is undertaking presently. These strategic elements express the entrepreneur’s passion and the vision of the business.

5. Description of the firm’s products or services

All products and services the company intends to use to help solve its customers’ problems are described here. An overview of how the products are to be used is provided in this description. It is worth knowing that in the description of the product and service, more attention is placed on the benefits the customer will enjoy than the features of the product.

6. Business and Industry profile

Background information about the business and the industry as a whole is addressed in this section. It provides readers with information about the market segment, trends, market size, and growth, ease of market entry and exit, critical success factors in the industry, competitive strengths of major entities, and the future dynamics in the industry as well as competitive advantages.

7. Competitor analysis

Entrepreneurs who believe they have no competitors are fooling themselves and raising red flags to investors. This section describes major competitors whose activities can, directly and indirectly, affect the operations of the business. The outcome of benchmarking and competitive intelligence assessment can be used in this section of the business plan.

8. Market entry strategy

The uniqueness of your business venture in differentiating yourself from others is key here. How you position your business in serving your customers with your products and services separates you from your competitors. This part of the business plan should inform your readers how your company is viewed differently by customers.

9. Marketing strategy

To your investors or lenders, this element addresses product development, target market, market size and trends, advertising and promotion, distribution, location, pricing, and other marketing activities. It is important to add documents to back the market claims you will make here with facts and market research.

10. Entrepreneurs’ and Managers’ resumes

Most importantly, investors want to be assured that their funds are in good hands and managed by great minds. They don’t just invest in good ideas, but a strong team who will ensure that the idea is successfully implemented. Resumes of founders, key directors, and managers are captured here to inform investors and lenders of the qualifications, knowledge, expertise, and experiences of the team.

11. Plan of operation

How the business intends to operate in achieving set goals cannot be ignored in the business plan. An organization chart, showing key positions and people who occupy them, staffing plans, employee compensation, inventory management, accounting procedures, and policies, space required as well as a description of the form of business ownership.

12. Financial statements and projections

This is one of the critical elements of the business plan investors don’t joke with it. It is made up of financial projections for the upcoming years using previous and recent data carefully.

The income statement, balance sheet, cash forecast, and schedule of planned capital expenditures are presented in this section. Investors and lenders have their own ways of verifying the validity and attainability of the projections. Therefore, entrepreneurs are advised to be prudent and pessimistic here.

13. Loan or Investment Proposal

Ultimately, this is the purpose of the business plan; seeking funding from investors and lenders. The proposal should clearly state the amount needed, the purpose of the fund and repayment schedule for lenders, and attractive exit strategy and returns for investors. It should also contain all sources of funding intended, including the capital the entrepreneurs and other founders are contributing to the business.

Conclusion

Writing a business plan requires time, effort, and thoughts. Some entrepreneurs may decide to sort for help with business plan software to generate one for their businesses to save time. However, these templated business plans come with their own challenges. And investors who have been reviewing enough business plans can easily identify them.

It is therefore practical for aspiring entrepreneurs to integrate the use of software assistance and their manual inputs to create their own business plans.