There are different types of companies and each of these companies has a different business. A business plan should be prepared in a that can reflect the business, therefore what is described below is more like a guideline than a template.
This business plan outline is constructed in such a way that each segment can reply to a specific group of investor questions about the business
A Model for Comprehensive Outline for a business plan is shown below:
1.Structure & Ownership
3.Products and Services
1.Demographics and Segmentation
5.Barriers to Entry
2.Key Assets and IP
Here is a further explanation of each segment and get into the depth of what information should be included and where to find this information.
1. Executive Summary
The primary segment, the executive summary, is the most essential part of this outline. If the interested parties find this segment appealing, only then the potential investors will focus on the other segments of the plan to get more information.
After all, this segment provides a summary of the rest of the business plan therefore although it is first in the format it must be written last.
The executive summary should be prepared in such a way that can get the investors thrilled in a couple of minutes. Do not try to be descriptive about your business. Keep it concise and only include major key points of the company.
There are four topics that must be present:
A.who you are
B.what you sell
C.how big and profitable it can get
D. how much you need
The main purpose of this segment is to present the company and its management to the investors. The content of this segment will be different based on if it’s an existing business or if it’s a starting business.
Structure & Ownership
This is entirely a descriptive portion, the major questions one needs to answer here are given below:
- who are the shareholders: as an anti-money laundering requirement, Investors will check the list of shareholders and their position and power before making a decision about whether to invest in this company or not.
- what is the legal structure and where the company is registered: The investors will try to have a general idea about the size of the business and the applicable tax system of the company.
If the business plan is for an existing company then this segment will include the major highlights to date. The intention here is to form credibility and show to the investors that this is a suitable business.
If this is a plan for a business for which location plays a vital role (such as a shop or a restaurant) or if it is a large business with multiple offices or factories then it is advised to show the key locations of business using a map in this section
This is one of the most essential section of the business scheme. It must be indicated that the team has a strong experience in this sector and the skills to operate this business efficiently.
If there are any important skill missing in the team, it needs to be addressed must mitigate them here.
3. Products and Services
To prepare a perfect product and services segment is to give specific data about the product or service the business sells, the targeted client, and the process by which they are being targeted.
After this segment, the investors will start thinking about the Scope, area, and profitability of the market and attempt to guess what will be the overall strategy. The investors should be sent in the right direction! So the information here needs to be specific, don’t say for example “I sell pants” but “I sell denim jeans targeted at men aged 16-25 who buy online”.
4. Market Analysis
The main reason for the market analysis segment is to show the investors that:
- The market can sustain a large business
- The business has a clear understanding of their customer and their demands
- Regardless of competition, there is an opportunity for business to survive
Analyzing the size of the market is on the first of task serial.
Demographics and Segmentation
Analyzing the market will depend on the type of business. If it is a small scale business, such as a barber shop for example, then the market needs to be analyzed on a local basis. If the target is a wider audience, then the market should be evaluated at a national or an international level.
The target market is the type of audience you target within the market. one must detect the difference in segments in the market and describe which audience should be targeted and why.
This section is where the business demonstrate that they have grasped the knowledge of the market. They know what makes people spent their money.
This section describes the competitors, their position in the market, and their strength and weaknesses.
Barriers to Entry
This segment shows to investors that the risk of new competitors in the market is very low. Therefore, if the business plan is for a start-up then this section is very important as one need to present facts that this business will prevail where others may fail
This segment discusses regulations which are applicable in this sector and the business will comply with it.
This segment simply shows the viewpoint of the business planner. And how he intends to face it and why it will be effective.
This section describes the difference between the business and its competitors and why this business is a better choice for investment
In order to describe and rationalize the pricing strategy the business planner should focus on the points below:
- Comparison of price between the business and its rivals
- Show the profitability of the business
- Justification of the business pricing
This is the section from which the business planner begins to set aside the general view of the market to focus on the implementation and execution strategy of the business plan. Therefore the planner needs to show the investors that not only the business has inside-out knowledge of the market but also have a surefire plan to dominate that market.
This section describes the aims of the company. This is a resolution that the business is making to the investors and you will be judged based on your ability to accomplish these aim.
This segment discusses how the business will operate.
This section describes the number of people will be employed and their responsibilities. If the staff is planned to grow over the period of the business plan, it is recommended to explain the motivating factor.
Key Assets and IP
This section detects and eliminates any operational risks that could surface from the asset portion.
This section discusses the various suppliers of the company and the relationship between the company and suppliers.
7. Financial Plan
If the beneficiary of the business plan is a lender one needs to demonstrate that this business is stable, profitable and can generate cash and that the business is not going to take too many risks. If it is an equity investor you need to demonstrate that this business can become prosperous and generate enough money for it to become easy to sell and allow him to acquire his expected return.
This section will provide the list of sources and utilization of funds necessary to initiate the business.
The investors focus on the amount of money is required and how much money is funded by the shareholders so far.
This is a disclaimer section. one must detect the major assumptions masked your financial forecasts. These are the assumptions the investor will give importance to test whether this plan is suitable for them and make an estimation of the possible pros and cons.
The main purpose is to create and rationalize the sales estimated for the next three years.
This portion analyses the operational risk of a business. The analysis resides in two basic concepts: operating leverage and breakeven point.
The break-even point (BEP) in business and specifically cost accounting is the point at which total cost and total revenue are equal. If we want to say more specifically there is no profit and no loss at all.
operating leverage has to do with operating profit elasticity, which is the influence of a difference of 1% in sales on the operating profit. It looks quite complex but it is actually very simple. There are two aspects in the operating leverage: the level of fixed vs. variable costs and the margin on variable costs.
This section will present financial statements of the business. These statements can be the yearly basis and monthly cash flow presentations.
This segment should hold a detailed piece of data or backup information. The main purpose of this section is to provide extra relevant content for the investors to use.
Mentioned above is the outline of a business plan that can help businessmen get new investors for his company. The end result depends on how well can the businessmen can utilize to his advantage.