In the previous post I write about seven different meanings of a business plan. It is more about why the business plan is helpful for entrepreneurs. In the future I plan series of posts about planning that will be more about details in writing it as a part of planning process.
In this post, I want to select the most important parts or elements of a business plan that will give the more proactive role of an entrepreneur as a person who plans to start a new company. The intention is to look in a business plan more as a part of an overall planning process not as a physical document, or something that must be written.
1. Business Model
Business model is something that is developed around an initial business idea of an entrepreneur. Everything after this element in the planning process is based on that model. It can be a simple piece of paper or napkin that you find around your hand when you come up with some good idea. This piece of paper after that can be translated in bigger paper with better graph of the model.
Something that is more important is that business model is not based only on an entrepreneurial idea, it only started there. It must be checked with the reality – the market, or the customers that will use something from the company. Because of that you start with the planning process immediately after the process of creation of the ideas.
2. Products or Services
You have a business model, but business model without something that your company will exchange for money is nothing. Products and services will be subject that you will be sold to the customers. They will be the things that will solve customer problems. Anyway, your idea starts with the problem that exists on the market.
Because of that, in the planning process you as an entrepreneur must find and describe every aspect of the future products and/or services. You can answer these questions as a framework in the process:
- What will be benefits for the customers?
- What will be features?
- How will be made products and services?
- What technology will be used?
- How the products and services will be sold?
- Who are the major competitors?
- What are features and benefits of their products and services?
- What are the most important differences between yours products and services and competitors?
- What products and services you can introduce in the future?
Answering this question you can have an important framework for your products and services in the broader view.
3. Needed Financials
Every start-up needs money. You cannot go with an effective planning process without financial planning included in that process. You need money to start the company, to grow it, to develop and implement new ideas, to pay daily activities, to make more money…
You can have the best ideas incorporated in your business model, and develop on paper the best products and services, but if you cannot produce them and bring to the market your company cannot start or cannot develop as it is covered in the plan. Because of that you must spend your time in planning needed financial for each business venture in which you want to enter.
In your planning process, you must answer these questions:
- How much money I will need to start my company?
- How much money I will need after startup before my business start brought money?
- How much money I have that is needed to invest?
- Where I can find additional money?
- What is my backup strategy about finances?
4. Market Analysis
Market analysis is a basis to see what’s really happening outside of you as an entrepreneur and your business. It will give you answers that you didn’t know, and that you can incorporate in your business model, products and services, financial and strategies. It must be performed if you want to build a company that will be close to the potential customers. This analysis must answer at least on the following questions:
- What are the target customers?
- How often those customers will purchase specific product or services?
- How much they are willing to pay for products and services?
- What is the dimension of the market that is obtained from competitors?
- What is the price of the specific product or services of the competitors?
- What is the impression that we make with our marketing campaign?
5. Strategies Including Online Strategy
As a fifth element that must be resulted from a planning process is strategies. Without strategy entrepreneurs can be seen as a persons that were loosed in the space that looks like an infinite universe. Strategy is a tool that will give you eyes to see your path for the future success.
As you can see I stressed online strategy that must be part of overall business strategy. When you make a strategy you must think about the online presence of your company because more and more it is identified with your overall strategy.
6. Break-Even Analysis
Break-even analysis is a very powerful tool for entrepreneurs. It simple tells you how much you must sell in certain period of time to cover all costs. And everything above that point of sale will be the profit. You can check the planned numbers and numbers from the break-even point and make necessary alignments in sales forecasting, financial, marketing activities…
7. Cash Flow Analysis
Does your business will have enough money to finance business operations in certain period of time? This question will be answered from cash flow analysis. It is important part of each planning process, especially for the startup businesses.
8. Profit-Loose Analysis
Does your business will make profit or loose? When the business will start to make a profit? This questions will be answered with profit-loose analysis. With this answer you can align your financial planning process and will now what you must to take to ensure normal business operations.