What Are The 5 Elements Of A Business Plan?

Business Plan Explained :- Every entrepreneur knows that the only constant thing that keeps the business running and growing is the ‘change’. In fact, in one’s entrepreneurial journey the thing that will change oftenly is how he conducts and runs his business.

Some business owners are not convinced with planning far ahead for their businesses. But having a solid business plan is essential for many purposes, including but not limited to:

• Getting a high return on investment
• Applying for a business loan
• Deciding the budget for long and short term
• To get an in-depth understanding of how businesses work

Perhaps even more important than preparing a business plan is making sure it is updated for each of the small and big changes that your company undergoes as it grows and develops.

Practical Approach

A good and practical business plan is defined as one that helps to provide clarity and direction to every key player in the team in your business organization. It is a means of addressing doubts, clarifying objectives, and creating communication. It lets you see things from both macro and micro perspectives. When you emotionally break and suddenly feel that your business is now aimless, the business plan can fix everything. In such times too the business plan needs to be modular and flexible so that it can manage your business needs.

However, there are 5 elements of a business plan that are necessary to ensure the company’s growth.

Business Plan – Key 5 Elements

Your business plan doesn’t have to have all the formalities and a lot of details unless you’re looking to make a long term profit. No matter how informal a business plan be, it is best not to leave out these five key elements:

1. Executive Summary

The executive summary of your business represents the first impression to the reader. It is the first section of your business plan, and also the last one that should write precisely. This represents the first impression of your business reader. A good executive summary comprises of important facts about your business.:

• Business and Product Description
• Current status and targets
• Financial outlook and requirements
• Past and future achievements and goals

Further, the most important point that makes a great executive summary work is letting the reader know why they should read the rest of the business plan, and why you want them.

2. Overview of the Business

After finishing the executive summary, a business plan is represented with a detailed description of what your business proposes and how it relates to the market where it operates.

In this section, you should properly explain:

• What does your company do ?
• What products or services are you selling to the people?
• In which market/industry are you operating?
• Who are your customers?

While describing your business make sure that you represent the market/environment where your business is operating and how it will manage to survive & grow in that environment from the competitive point of view.

The companies that operate in a very niche or particularly innovative areas have to include the specific market dynamics in this business plan. 

Make sure to include:

• Mission statement
• Company’s philosophy, vision, and goals
• Industry and target audience
• Description of your business structure, customers, suppliers, partners, and competitors
• Describe the products and services and how they will help people
• Unique selling place(s)

3. Sales & Marketing Strategy

To create this section of the business plan one should have an in-depth understanding of his marketplace and how they are going to place their business with the competitors with existing players.

You should outline the following within your sales and marketing strategy:

• Definition of your target market – its size, current and emerging growth, and your projected market share.
• Evaluate Your Market – It should summarize how attractive your target market is to your company.
• Threats and Opportunities – You should use a SWOT analysis to represent these aspects.
• Product/Service Features – Once you describe your product/service thoroughly, highlight its unique selling points, as well as any complimentary offerings and after-sales services that you are offering.
• Target Consumer – Whether you are a B2B or B2C company, it is a good idea to include an ideal customer profile to accurately describe the goal (s) you are going to target.
• Key Competitors – Research and analyze any other players inside or outside your market whose offerings may directly or indirectly compete with you.
• Positioning – Explain in a short paragraph how your company differs from your competitors and how it presents itself to its target.
• Marketing Plan and Budget – To promote your business you should outline your marketing and advertising strategy using an overview of your brand and the communication elements that support it.
• Pricing – Explain how your pricing strategy fits within the competition and how it relates to your position.

One very common mistake that should be avoided is writing that you have no competition. Instead, you should try to research your competitors and assess how they can endanger your business.

4. Business Operations & Management

In this section, you need to explain how your company does things differently.

The people and processes play an important role in the company and help you make a better product, deliver it more efficiently, and at a lower cost. Your operations and management must successfully fulfill what you ‘promised’ in the previous sections.

Pay attention to two main points:

1. Operational Plan: This comprises day-to-day operations of the business and you should include:

• Production or service delivery
• Quality control
• Inventory
• Supplier
• Credit policies
• Legal environment
• Location

2. Organizational Structure: This involves detailed information about the people involved in your business such as decision-makers, investors, banks, managers, etc. 

5. Financials 

One thing that is found in many simplified business plans is that they often omit the financial details and the planning aspect of the business. If you look through this list, you will realize that everything written here needs money to run efficiently, so it is strange to see that this description is left out by several marketing professionals too.

These financial are necessary calculations:

• Estimated revenue
• Monthly expenses
• Estimated profit
• Assets and liabilities
• Break-even calculation

If you are a startup, small business, or an established business, you should create a business plan to overcome future problems. If you need any help with legal formalities, you should contact a legal advisor. And if you need any advice on marketing and sales you should contact LeCiel Technologies. We are one of the leading digital marketing companies and possess a team of business experts and marketing professionals. You can call us at 1-888-664-8126 or visit our website online.