When we ask our clients about their sales goal, we see a pattern. Some business owners would have a solid number to work with, while others would just say along the lines of “I dunno. But I don’t care, I just need more sales”. From the way they answer, we already have an idea of who have already thought out their business well enough and those who don’t.
We, of course prefer the former: a business owner with clear goals would be far easier to work with because there’s a clear guideline and goal to work on.
Business Plan: The Five Elements
A business plan does not have to have the formalities and many details unless you are looking to get some serious funding. No matter how informal a business plan can be, though, it is best to not leave out these five key elements:
One thing I noticed with a lot of simplified business plan templates is that they often leave out the financial information and planning aspect of the business. Looking through this list, you will realise that everything written here needs money to run efficiently, so I find it strange that this detail is rather scant or even left out.
I defined financials as essential calculations that cover:
- Projected Revenue
- Monthly Expense
- Projected Profit
- Asset and Liabilities
- Break Even Calculation
To emphasize the importance of this section, let me share a personal story: For two years, I have been just winging my way through, with no clear goals and direction, and a nagging fear about not being able to afford costs and keep cash flow running.
The break I needed happened when I wrote a full formal business plan for an entrepreneurship competition. Specifically it was the Break Even Calculation that gave me a concrete target to work on, and I was motivated enough to hit comfortable figures within TWO MONTHS! That’s because I already know at what point of sales can I say, “Hey, I have enough to feed myself yet be able to have enough to grow the business.”
We’re excited about our product or service and is raring to tell others about it and sell. Besides, selling is the final step to seeing the money and that would probably make us the happiest. But without understanding what it takes to market your product, you’ll be communicating about your product or service the wrong way; wrong audience, wrong message, wrong product, wrong results.
That is why marketing yet another key aspect of your business plan. In fact, knowing how to market is so critical, that you would need a separate plan on its own. Make sure it covers the following aspects of your business:
- Market Avatars
- Unique Selling Point
- SWOT Anaysis
- Marketing Message
- Marketing Communication Medium
Is there a manufacturing process? Who is involved in the process? Are there any third parties involved? What is involved in delivering the service to your customers? Any additional tools needed? These are some of the questions that need to be addressed when it comes to talking about your operations. When crafting this section you will be able to determine a few needs:
- Supply Chain
- Payment Policies
- Warranty/Refund Policies
- Legal Compliance Matters
It is insane to think that you can handle every aspect of your business yourself. There will be something that needs to get done and you cannot do it alone. Hence, writing about your operations above will help you figure out the aspects of the business you need help with, hence you will know who or how to hire. For example, you probably need someone to help with the business filings and compliance, another to ensure that supply and delivery of items are up to standard, another person to seek out new sales prospects, while you concentrate on trying to get your business to grow.
Determine your manpower needs by going through these factors:
- Roles and tasks
- Skill upgrade, employment or outsource
5. Mission Statement and Vision Statement
This usually goes at the top of all business plans. The reason why I put it last is not because it is the least important. After going through the above four key elements of your business plan, you may sometimes change what you originally intend your business to be! You may find that certain things may make be more useful to customers than you first thought. But even if you offer a different solution than what you originally intended to, it may be able to give you the same kind of satisfaction.
Hence, crafting your mission and vision statements last can help serve to wrap up all your your business plans nicely. It can help encompass perhaps wider range of solutions, because you saw a wider range of problems to solve. That does not mean you have to offer everything however. A mission and vision statement can also keeps you focused on your best niche which, ultimately, should be how you should first start.
Your Business Plan Will Not Be Short
Addressing these five elements will not give you a short business plan (it definitely need at least five pages worth!). But it doesn’t mean that you can’t have it done in brief and concise point forms either. What matter most is that for your business plan to be able to guide you through your business for at least two years. It should also be easy to understand, easy to refer to and easily use as a tool to guide your team to do what it takes to propel your business forward.
What is the most important key element that is most important in your business plan? Do you have any key information that should never be left out? Comment below to give us your input!
Armen Rizal Rahman