10 Vital Elements of a Successful Business Plan

What Makes a Good Business Plan?

To understand the essence of a good business plan, let us start with a piece of imagination. Suppose that two friends decided that they should go on a leisurely travel trip. However, they also want their third friend to join them on this trip. The problem is that this friend is not a travel enthusiast. The challenge for the first two friends is to convince the third friend to come and join them on this trip. So, they decided to come up with a travel plan highlighting different elements of it. This included destination details, itinerary, travelling schedule, accommodation, transportation, cost of the trip, food, bookings, paperwork and permissions, etc. This travel plan summarises the essential elements and necessities of their journey. The travel plan was designed to succeed but the third friend still chooses not to join them. Nevertheless, the two friends successfully completed their trip.

In essence, a business plan is similar to the travel plan mentioned above. Like a travel plan summarises travel details, a business plan provides a summary of a business covering what the company is about, how it functions, what markets it caters to, who its customers are, what values it offers, what its products and services are, who the competitors are, who manages and runs the business, how it is performing financially, and any other relevant element.

Thus, a good business plan offers a clear and concise perspective of driving a business to success. The additional catch to business plans is that they are also used by investors to evaluate their risks and returns from investing in a company. Other stakeholders interested in business plans include financial institutions, private investors, shareholders, clients and customers, and suppliers and vendors.

This blog highlights ten essential components of a successful business plan while keeping an eye on the element of its utility to external stakeholders.

#1 Executive Summary

If a business plan is a drone view of a proposed enterprise, the Executive Summary is the drone view of the overall business plan itself. The executive summary encapsulates the business plan in a few words. The purpose is to help readers, mainly external stakeholders, make a quick assessment of what lies ahead in the document. For example, in reading a newspaper, we check the headlines or subheadline first and if it is concerning, we go on to read the full article. The subjects whose essence is covered in an executive summary are highlighted next in the points ahead. For startups, this section is critically important because this could be the first time investors would be hearing about them. In business plan writing for startups, this section needs special focus.

#2 Company/Enterprise Description

In a company or enterprise description, the readers are informed about the identity and profile of the business. The identity may include the registered business name and address, legal profile, communication details, etc. The profile information highlights the core business, core product/service, core competencies, vision, mission, etc. Company or enterprise description helps customers, clients, investors, shareholders, suppliers, and other interested stakeholders understand what a business is about and its roots of existence. The identity part in this description is important because it lends a certain degree of validation in establishing the identity of an enterprise. For example, if an insurance agent does not mention their authorised registration number on their visiting cards, customers may hesitate to give business to such an agent.

#3 Market Analysis

Market analysis in a business plan sheds information on the market to be served. Market analysis reports are extensive. In the context of a business plan document, only the essential points from market analysis are highlighted. This covers demographics, competition, market size, gaps and voids, target segments, trends and developments, regulatory environment, impact of technology, future projections, etc. This segment is relevant to clients and customers who are interested in buying the offerings of a business enterprise. It gives them a direct picture of whether or not a business intends to cater to their needs and wants. This also explains the relevance of custom business plan writing.

#4 Offerings: Products, Services, and Value Propositions

In the product and services section, the offerings and value propositions of a business enterprise are brought to notice. It highlights the entire range of products and services offered and the values such offerings hold for the buyers. For example, an electronics retail shop may highlight that it offers free home delivery of orders beyond a certain value within city limits. From this information, customers get to know that they are getting an additional value of free home delivery. A competitor store may further add that it also provides the best prices in the market. This information makes the content in this section more interesting for the second store.

#5 Competition Analysis

The knowledge and awareness of competitors and the nature and intensity of competition are relevant to both businesses and their stakeholders. It helps understand how easy or difficult it is for a business enterprise to sell and earn revenue, capture market share, and become an established player. Competition analysis should also provide a comparison between the players in a market and explain how the host already has an edge or intends to build one or more and sustain the same. This should not involve revealing strategic details. An outline of competitiveness in a convincing way should be good enough for investors and other external stakeholders.

#6 Marketing Strategies including Sales Strategy

To explain in a nutshell, marketing strategies define how a business entity intends to attract and retain customers. An obvious outcome of this effort is that customers keep buying which makes sales an inseparable part of marketing. An overview of marketing strategies must show that a business enterprise has a solid understanding of gaps and expectations in the market which then makes it easier to formulate the strategies required to attract customers. Retaining customers requires a different approach. It calls for consistency in operations which helps maintain consistency in the delivery of value propositions. It also calls for keeping an eye on changing trends and preferences. Adaptation or fine-tunings in marketing strategies are essential to stay relevant in a market.

#7 Management and Organisational Structure

Another relevant piece of information in a business plan document is its management and organisation structure. It is important to establish as well as let relevant stakeholders know the team behind the show i.e. the founders, co-founders, and the top management body. People gauge a lot from the qualifications and experience of business owners. It makes an instant and profound impact on brand perception or the goodwill and reliability of an organisation. For example, there would always be a difference in perception between a team of experienced and reputed doctors starting a hospital and the same initiative carried out by a few successful businessmen from non-medical backgrounds or non-medical industry.

Organisation structure further maps who’s who in an organisation. It shows the departments into which a business is divided for management and operational purposes. It establishes the framework of authority and responsibility relation, and departmental interconnectedness in an organisation.

The highlighting of management and organisational structure in a business plan document provides a functional framework of how a business is going to be internally managed and by whom.

#8 Operations Plan

The operations plan showcases how a business is going to create and deliver the intended value propositions from beginning to end. This entails highlighting the strategic and execution aspects of procurement, inventory management, quality control, logistics/delivery, staffing, customer support, cash flow management, order fulfilment, store management, asset management, safety and security, returns and refunds, etc. In essence, the operations plan in a business plan shows how things are going to be executed in a real-world scenario. For example, an omnichannel departmental store may show that it will facilitate home delivery of orders by hiring the services of a 3PL partner.

#9 Financial and Commercial Planning

From the viewpoint of generating investment interests, financial and commercial planning is the basis of a efficacious business plan. Also, the quality of financial and commercial planning plays a key role in helping keep the finances of an organisation in a manageable state. It also serves as an index for maintaining financial control. Having checks and balances helps keep expenditures and other utilisations of funds within budgets. The most important outcome of having sound financial and commercial planning is that it helps gauge the profitability and long-term survival of a business with greater certainty. Some of the important areas of work in financial and commercial planning are:

• Assessment of capital necessities and OPEX
• Demand projection
• Sales and revenue projections
• Cash flow and working capital management
• Pricing and margin analysis
• ROI and break-even analysis
• Calculation of financial ratios as applicable
• Preparation of estimated P/L statements (5 years at least)
• Preparation of estimated balance sheets (5 years at least)
• Assessment of internal and external funding

#10 Funding Needs and Prospects

In addition to establishing clarity of vision and implementation, another common objective in preparing business plans is to show the prospects of investments to potential investors and shareholders. This section is exclusively developed for angel investors, financial institutions, and shareholders. It highlights investment necessities, a plan for the application of funds, a vision and roadmap for growth and expansion, and the prospects of yields from investments in unambiguous terms. For new players, this is the most anxious part of their business plans. In such cases where there is a lack of experience in handling business plans, it is often recommended to go for professional business plan writing services or outsourced business plan writing solutions. Business plan writing for investors demands an experienced approach. The same degree of seriousness also applies to business plan writing for small businesses that are looking for investments to fund their growth and expansion endeavours.

About Your Retail Coach

YRC is a retail + eCommerce consulting marque specialising in organisation setup, management, and scale. With over a decade of experience, YRC has worked with over five hundred clients in more than twenty-five sectors with an accomplishment ratio of +94%.

For any kind of assistance in business plan writing, please drop us a message and one of our business plan consultants will shortly reach out to you. We engaged qualified and experienced business plan writers in service design and delivery.

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