Creating an effective business plan is an important step for any business. It is, in fact, a central component to starting, growing or developing your business. A well-crafted business plan can help a business fulfill important needs when entering or navigating the market. Some examples of this would include:
- Applying for financial assistance – applications for grants, loans or lines of credit often require the submission of a detailed business plan. In these situations, a detailed plan can be the deciding factor when it comes to obtaining an approval.
- Giving your business direction – creating a business plan requires you to really think about the key elements of your business, which will help in planning out the direction you want your business to go.
- Identifying your strengths and weaknesses – as you complete your business plan, you will be able to identify what makes your business a strong competitor. Similarly, it will help you discover weaknesses that need to be addressed.
- Helping to make strategic decisions – as you reach certain milestones for your business, referring back to your business plan can help to clarify your original intentions and goals and stay on track.
For all of the above reasons, it is essential to ensure that your business plan is complete and well-thought-out. While there is not one definitive way to craft a business plan, the most successful ones typically include the following elements.
Important business plan components
- Executive Summary: A good business plan will start with the executive summary. Primarily, it should be compelling and catch the reader’s attention right away. Along with a creative “hook”, it should summarize the important aspects of the business plan while communicating the overall problem you are solving.
- Description of the Business: Next up, it is important to accurately describe your business, including your products or services. You should include your company’s structure, strengths and goals. Additionally, this is an opportunity to explain how your product or service solves a problem or fulfills a need.
- Company Organization: Another primary element of a good business plan provides details about the leadership team of the company. Investors want to know who is in charge and what qualifications they have. In fact, many investors will evaluate the strength of the management team as a driving factor in investment decisions. Additionally, this allows you to identify what leadership qualities are important to your organization.
- Market Analysis: A key component in ensuring the success of a company is to thoroughly identify the market in which you will be competing. A complete market analysis provides details on your target market’s demographics, locations, buying patterns, etc. This demonstrates that you fully understand how to reach those who would be most interested in your product or service.
- Competitive Analysis: Once you provide evidence that you have a plan to effectively reach your intended market, you must also show how you will do it better than your competition. To accomplish this, a competitive analysis will detail who your current and potential competitors are and what role they each have in the market. Additionally, this is an opportune place to show what their weaknesses are and how you can better fulfill the needs of the market.
- Financial Summary: Your company’s financial picture is a very important component of a business plan, and one that is of particular interest to an investor. This section should include vital financial statements such as your balance sheets, income statements, cash flow statements and estimated projections. Additionally, if applying for financing, you should explain in detail how much money you need, what the funds will be used for and when you will be able to pay it back.
Invest Aurora will help you prepare your business plan
As detailed above, a business plan is an opportunity to identify the key components of your business, set short-term and long-term objectives, as well as present your business to investors in order to secure capital. Without a doubt, it can be an essential tool in helping to achieve your overall business goals. Because of the importance of this document, a business owner should invest the proper amount of time preparing it.
Preparing an effective business plan, however, can be overwhelming for many business owners. At Invest Aurora, we are dedicated to helping our business community achieve their business goals. As such, we offer a number of helpful business services, including assistance with preparing a great business plan. When you work with one of our economic development professionals, we will help you identify and organize all of the most critical aspects of your business plan so you can truly represent your business effectively.
Contact the Invest Aurora team by calling 630-256-3160 or through email at firstname.lastname@example.org.