The entrepreneurial spirit strikes millions of people every year. The latest data from the United States Small Business Administration indicates there are 32.5 million small businesses in the U.S., which underscores just how many people aspire to be their own boss.
There’s no formula that entrepreneurs can follow to ensure their start-up is successful. However, devising a strong business plan is a great place to start. Such plans can serve as a road map for entrepreneurs as they try to turn an idea into a business and are often a necessity for prospective business owners who will be seeking funding from lenders or investors. The career experts at Indeed note that effective business plans are made up of various essential components that all entrepreneurs can utilize as a framework when starting their businesses.
• Executive summary: As its name suggests, this provides an overview of the business plan. Executive summaries typically contain the mission statement and include information about the products and services the business will offer. Curiously, though the executive summary could be the first thing lenders and investors read, Indeed recommends writing it after all other components of the plan have been mapped out. Doing so ensures the summary will reflect a full and clear understanding of the business.
• Business description: This section should include a detailed description of products and services and information about target customers. It also can help to identify the industry the business will be in and include an analysis of industry trends. The description can include information about how the company is organized, noting information about key personnel, including their histories and roles in the start-up.
• Market analysis: The experts at Indeed note that the purpose of a market analysis is to identify the company’s primary target audience, including its demographic, and where to find that audience. This portion of the plan should include how the business will meet the needs of its target audience and the best avenues to connect with that audience (i.e., social media, in-store, etc.).
• Marketing and sales strategy: The experts at Growthink, which has provided strategic advisory and investment banking services to emerging and middle market companies since 1999, note that the marketing and sales plan should detail how a business will penetrate its target markets. Information regarding promotional strategies, pricing strategies and potential marketing partnerships are just some of the details to share in the marketing and sales strategy.
• Financial plan: This section will include significant information about the company’s finances, including detailing how much capital the business will need to meet its objectives. The financial plan should include a detailed account of how revenue will be generated, and entrepreneurs should include financial statements and projections regarding cash flow.
These are not the only components to include in a business plan. However, they can serve as a useful foundation for entrepreneurs on the cusp of starting their own businesses.
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