A business plan is a strategic instrument devised to help entrepreneurs transform their ideas into full-fledged businesses, track their future goals and attract investors.
A business plan has several key components that need to be kept in mind while drafting it. In this article, we will be discussing these components and their roles in creating a proper plan.
The first and one of the most critical steps is ‘explaining’ your business. Before we go into the details of the concept, it's crucial to understand what the business is about, what product or service it provides, who it will target, and what problem it will solve. These questions make up the overview of your business.
What will your product or service accomplish for your customers? Why should a customer choose you over your competition? What will drive your earnings and which problems of the market will your company solve? An organization’s competitive advantage is built on the foundation of its value proposition: A strong value proposition will help you stand out and form the basis for your marketing and sales strategies.
Investors will be interested in learning about the driving force behind the business; their confidence in an organization’s ability to implement the strategy will hinge on the information about members' backgrounds and experiences. You need to firmly establish that you have the right team to execute the plan you have laid out, and, if not, you have a clear sense of who needs to be hired to round out your current team.
The organizational chart of a corporation often depicts the relationships between employees. There is no standard format for organization charts other than placing the chief executive, department, or function first, or at the top of the sheet, and the others below, in order of rank. Official titles, as well as their names, are occasionally encased in boxes or circles.
The different types of organization charts include:
Although each department may not have a well-defined team structure, particularly in startups, you can use prospective models to help investors and set a target for yourself.
A revenue model is a blueprint for generating revenue. Which source of revenue should be pursued, what value could be offered, how the offering could be priced, and who pays for the value, are the moot questions here.
One of the first steps in preparing your Business Plan is to identify a suitable and realistic revenue model that can create enough income to ensure the success of your enterprise.
A go-to-market strategy outlines how a business will reach out to its target customers. According to SalesHero CEO Stefan Groschupf, a GTM should establish the following key points.
Product Market Fit: What problem(s) is/are your product(s) designed to solve?
Target Customers: Who is the target audience for your product? What is the price they would be willing to pay for a solution?
Demand and Competition: Who else is offering what you're launching? Is the product in demand, or is the market oversaturated?
Distribution: What strategies do you plan to use to market, sell, and profit from your product?
Products can be presented as solutions once market pain points have been ascertained, albeit each product and market will require a unique approach.
Because of globalization and digitization, practically every product and service is subject to fierce competition.
Competition analysis ensures that your new business meets or exceeds customers’ current expectations. You'll need to identify your competitors based on a variety of characteristics, including domain, product kind, service type, and delivery mechanism.
One might begin by examining what others have to offer and compare it with one’s own product strategies. You'll need to figure out why a company is a rival and what kind of threat they constitute.
PESTEL (Political, Economic, Social, Technological, Environmental, and Legal) analysis helps you understand the business environment of the market and SWOT analysis gives you a perspective on where you stand in the market.
SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats. It helps one evaluate the internal as well as external factors that influence the success of a company. It offers perspectives on what your firm can do and what are the opportunities or threats it might have to deal with in the future.
A fishbone diagram is created to predict the possible causes of a future event or problem. Because the various reasons for the problem are written on an image that resembles the bones of a fish, it's termed a fishbone diagram. The problem is represented by the head, and each of the fish's bones represents a company function/department.
This allows companies to respond to a swarm of challenges that may arise in diverse contexts, enabling them to resolve threats as soon as they appear.
This document can help you get a better handle on your strategy, identify potential roadblocks, determine what resources you'll need and assess the sustainability of your idea or expansion plans. A good business plan has to be persuasive and get readers excited about breaking new ground. It must be logical and follow a structured approach, making it easy for investors to understand and review it.