Key Elements of a Basic Business Plan
Posted: Jun 10, 2016
Recent surveys have shown that start-ups and small businesses with a business plan are nearly 20 per cent more likely to make a profit than those without. The reasons for that are many but essentially when you have a plan you can take advantage of areas for growth and increased profits because you know what they are and where they are. Without a business plan it is hard to know which areas of a business are most profitable and where there is potential to increase sales or profit margins. It is difficult to see trends if you don't have the data written in front of you so if, for example, fewer customers are buying certain types of products you need to know that. Ideally you need to also know why and that information might also be more readily available from a business plan, although not necessarily.
But writing a business plan can be a challenge; to be useful it must contain a significant amount of detail and that detail takes time and effort to pull together. But now you know that failure to have a busness plan could be affecting your bottom line don't you think that time and effort will be well spent?
The act of putting together a business plan will also help you to clarify what the aims and objectives of the business currently are and these might have changed since it was first set up. Very few businesses remain the same over time, they typically evolve and grow into something quite different from what they first started out as.
So here are the fundamental elements of a basic business plan:
An overview of your business including:
- Description of all products and/or services
- Description of your main markets
- The management team
- Relevant skills and experience of the team
- Financial needs
- Profit Forecasts
- The name, qualifications and experience of the business owner(s),
- Date when it started trading.
- The Unique Selling Point (USP) and information about the main competitors.
- Reasons why customers would buy from your business
- Strengths and Weaknesses of the business and how weaknesses can be improved.
- Technology requirements
- Laws and regulations governing your type of business.
- Who are your customers and where do they live
- Income range and age range of customers
- Details of past sales (products/services and customer type)
- Market trends and the company's ability to adapt to changes
- Comparison with main competitors
Sales and Marketing Strategy
- Prices and profit margins (including delivery costs if relevant)
- Quality guidelines
- Customer services
- Advertising methods
- Website and branding
- Social Media
- Skills and experience of the management team
- Personal strengths and weaknesses
- Necessary training and development
- Division of roles and responsibilities
- Personal financial investment in company
- Real or projected sales by product
- Realistic sales forecast for future sales (3 years)
- Cashflow forecast
- Seasonal fluctuations in sales
- Regular financial commitments (rent, loan interest, salaries etc.)
If preparing the business plan seems too difficult then talk to someone who can help. An accountant can help with this as well as with your regular accounts; they can also make sure you are not paying too much tax and provide a range of other accounting services.
The author has written and published articles on a wide range of topics including Small Business Advice, Tax and Accounting, Interior Design, House Renovation and Project Management.