Entrepreneurs who are launching their first business may feel very comfortable with some aspects of what they have to do. For example, they may have run a similar business in the past, or been in charge of sales or marketing, making them intimately familiar with a lot of what must go into the business plan. However, this may be the first time they have written, or even read, a business plan. The following should provide a basic model to follow for a business plan.
The plan opens with the executive summary, an encapsulation of the entire plan to come within one or two pages. This summary should hook the reader and present no red flags or leaps in logic which confuse the reader. The plan continues with an overview of the company, its history to date including why the entrepreneur is starting it, and a description of the products and services to be sold.
The following three sections provide the background a reader needs on the market situation the business will compete within. The industry analysis sets the stage for what the major advantages, disadvantages, and particularities of the industry are. The customer analysis lays out who customers are, their specific demographics, and what segments the business will seek to target. The competitive analysis explains who the direct competitors will be and details the strengths and weaknesses of the top competitors with an eye towards how the company will stack up against them.
The plan then enters into sections detailing the course of action you have set. The marketing plan describes the branding, promotions, and pricing the business will seek to best win customers in the market situation described. The operations plan goes on to explain what is happening internally to enable the company to function and the management team description goes over who is running the show and how they are qualified to do so.
The plan finishes by focusing on the financial results of all of these activities in the financial plan and then full financial statements within the appendices of the plan. The financial plan should speak in broad terms about the costs and revenues of the business and what assumptions have been made to determine those items. The statements themselves are generally shown as more detailed for the short-term (for example, quarterly for three years) and then on an annual basis for the first five years.
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