The Significance Of A Business Plan And Its Essential Components​

Executive Summary:

It is the first section of the business plan but written last. It is the outline or summary of the whole business plan, i,e. What are the business idea, mission, objectives, Product and services, target market, little industry stats, Leadership, capital requirements, and ROI

Company Descriptions

In this section, you describe your business idea, locations, and company status. Moreover, you also elaborate on how this idea encourages you for startups and what vision you picture for business. You can also explain the background of the industry and hidden demand or anything that can engage the investor or support your business idea. 

There are more sub-sections that are equally essential to mention.. 

1. 1. Vision: The investor wants to know your long-term vision for the business
   2. Mission: The investor Wants to understand your short to medium-target achievement for the business
   3. Objective & Goals: can be in bullet points and can be more than.
   4. Key to Success: you explain the factors or KPIs that can be vital for the success of the business. Remember, these KPIs are related to operations, teams, customers, efficiency, etc.

   5. Unique Value Proposition / Differentiation/ Uniqueness: Give the best explanation of what makes the Products or Services Unique or Create Value to Customers.

Products & Services

In this section, you explain the products/services and describe their features, benefits, technology used, manufacturing process, sourcing, usability, durability, lifespan, and Unique Value Propositions. Showcase your minimum viable product or prototype; also explain the patent, rights, proprietary technology, coding or process, and the problem that your services will solve. You can also highlight your direct and indirect competitors and compare them with them. 

In Summary, you should elaborate on all the things related to products/ services that your investor would want to see and support your arguments.

Target Market

Target market means the most likely potential customer of your product and services. You need to explain who are your customers and your market’s persona. Identifying the business’s target market is a critical and imperative task for decision-making. Entrepreneurs must spend enough time analyzing the potential market. It is crucial to get in-depth knowledge of your potential customers, then you are more likely to get a good start in your business.

You can segment your target market in many ways, like age group, Income group, marital status, education-based, behavior base, Socioeconomic base, and geographical base. These depend upon the type of product and services you have.

Market Research & Industry Analysis

The investor pays more attention to the market research and industry analysis of the business. Market research is the total number of potential buyers of your product and services that can be your buyer too. These buyers can be a regional basis, specific interest, country-based education or income-based as described above section. The main thing is that you should be able to explain and emphasize how big the market size can be, and how much purchase frequency time would be, therefore all stakeholders can predict the potential revenue or market share of your product.

This section is the lengthiest part of your business plan because it’s like a concrete floor of your business and the whole business success is based on research. Therefore you should evaluate your market research and relate market trends, i.e. consumer behaviors, internet parity and consumer mindset shift, what age group likes your product or services, frequency of purchases, etc. 

Furthermore, you could also need to compare your product or services with your competitors, or you could show your competitor’s stats in your research. The research should be presentable and understandable The best way to show it is in graphs, infographics, smart art, or graphical images with explanations. 

If you have a good product but aren’t able to explain market stats and analysis adequately, then there will be no chance of getting an investment. Every entrepreneur must spend enough time collecting industry data related to their product & services. 

There are 2 approaches for analyzing the market size, the top-bottom approach, and the bottom-top approach. Another widely accepted format is to identify your target market in the business plan. Ie. TAM, SAM, SOM.

Sales and Marketing Strategies

This section is also critical and essential for investors because investors would want to see the sales process, revenue model, and marketing strategies.

The revenue model is how your company will make revenue and how leads convert into customers. Similarly, what would be your strategies for marketing and branding to attract and keep customers? 

The revenue model should be simple and accessible not only for investors’ understanding but for customers as well. If you have a good product, but the revenue model or payment process is not convenient then customers won’t come to you.

There are 9 ways of revenue models, which you can choose for your business It depends upon the type of product or services you have.

Similarly, there are many marketing strategies, some of our industry-specific, which wouldn’t work in other industries. For instance,  sales representative staff can be applied in the resort, and pharmaceutical industry, but wouldn’t work in the SaaS industry mainly. Therefore you must know the strategies you can use 

Moreover, you should also explain where you will spend your marketing budget for sales conversion and the brand position.

Strategies

Investors are more comfortable in charts and dashboards for briefing, rather than making long written documents. Therefore adding the following charts & analysis will help the startups with their depth understanding and also make a vibrant impact on investors.

Following are the most common charts & analysis.