Creating a Solid Business Plan: Essential Components
No organisation that takes itself seriously can escape the preparation of a business plan.
This is one of the recurring requirements that business organisations need to fulfill.
There are different uses for a business plan. It can be a requirement for a financing deal, or it might be one of the documents needed for a novel business opportunity. There may be variations, but the crucial components of a business plan are the same set of elements no matter what the end purpose is.
Here is a general description of each of the crucial components of a solid business plan.
1. Executive Summary
This is a short summary that is usually prepared last of all, where the benefits of the business opportunity or the enterprise itself are analysed.
2. The Purpose
This component presents the purpose, values, and vision of the business—its raison d’etre.
3. Framework of the Plan
It is important to explain in detail the context of the business plan. For what purpose is it being crafted? What would be the overall impact of the new venture to the whole organisation?
4. Players or Key Drivers
The people involved in the plan must be listed. Those who will serve as the key players or drivers need to be identified, since they are integral to the success or failure of the new venture or business opportunity. Their backgrounds, accomplishments, and track record must be considered.
5. MPS (Market Product Scope)
This component enumerates the scope of services and includes the products that are going to be offered. The limitations are specified as well. The market for these products are listed, clarifying what groups of consumers will or will not be served. In addition, the MPS also includes detailed study of the relative positioning of the offers in the industry. Pricing is presented and the possible competition is named. The customer strategies to be implemented are given plus the related costs.
6. Competitive Edge
This section pertains to the factors that will make your business the primary choice of customers. Competitive edge will enumerate the reasons why customers will choose you over the competition and end up keeping you as a supplier. When the competitive edge is already determined, everyone will work toward ensuring that the whole operation will be geared toward delivering this competitive edge.
7. Operational model
What operational model will the business follow? This is vital in determining the infrastructure requirements and the resources needed. The operational model will serve as the basis for the approach to be used in managing the supply chain and in the choice of the supplier. This section of the business plan will also specify the most probable cost structure.
8. Key aptitudes
In order to achieve success, these have to be identified: information technology, intellectual property, plant & machinery requirements, and people & management facilities, among other key aspects.
9. Organisational Structure
There is one more important question to be determined and it’s about how business structuring will be laid down. The roles and responsibilities of the people involved in the organisational structure are detailed, including their skills & qualification for the position. The recruitment needs for the positions that are still free have to be identified.
10. Financials (The Numbers)
The financial reports should include profits and losses. This component of the business plan also features the cash flow, the balance sheet, and funding requirements for every high road scenario. An analysis of risk/reward is added to the report. The numbers usually comprise reports that are good for three years.
Every venture that has seen success is founded on a solid business plan. For this reason hard work and dedication are required in formulating one.