How to Create a Succinct, Effective Business Plan
Whether one is a first-time entrepreneur opening a new business, or a serial entrepreneur working on the next venture, a business plan is often necessary. While creating a business plan is an extensive undertaking, consisting of many parts, it’s worth is clearly demonstrated when a firm that has taken the time to structure itself effectively is able to clearly showcase its mission and value to outsiders. Understanding the potential value that such a plan offers is an important first step, but how can an entrepreneur move on to developing a succinct, yet effective, business plan?
Executive Summary Considerations
The primary mission of an Executive Summary is to provide a snapshot of the entire company, offering the reader, notably potential investors, an overview of a company’s value. It often explains what the business does—how it solves an existing problem—and how the company will accomplish it. It also details the financial status of the business, including the amount of financing desired and the potential rate and timeline for investor return. Generally speaking, the length of an Executive Summary should not exceed one or two pages.
In addition, it is important to emphasize specific content within the Executive Summary based on the stage of the business. For example, newer companies should focus on the experience each founder brings to the organization. The summary should also feature a market analysis for the particular industry, an explanation of how the venture addresses a particular industry need and a description of how the business’ products or services will accomplish meeting that need.
For more established business entities, the Executive Summary can take a different form. It should begin with an overview of the business’ function, and include formation dates, founder names and titles, the current number of workers, and addresses for the company’s primary and satellite offices. Additional elements may include a discussion of recent growth, such as increasing profit margins or market share analysis. Provide a quick summary of product or service details, including any recent developments or innovations to existing products or services, with a summation of plans going forward.
Another important part of a business plan is to inform the reader, most often a potential investor, as to how capital will be used.
This section can be quite expansive because it covers how the individual product or service is produced from step A to step Z. Whether it is finding raw materials from a supplier, locating an office or factory to house equipment and employees, hiring employees or managing IT infrastructure, this part should be clearly detailed for external readers.
While it is possible to document every step or process, a good rule-of-thumb for approaching this step is to look at the particular industry and cover what is relevant to it. For example, in the metal fabrication industry one might focus on inventory management and how to deal with commodity price fluctuations. While discussing major points such as labor is important, be sure to strike a balance in your analysis, in order to help answer questions readers may have that are specific to your particular industry.
Each business plan is different for each business owner and industry. Making the most of a business plan benefits owners by increasing their chance of survival while simultaneously effectively communicating their mission in order to attract the right investors.