When starting a new business, one of the first steps you need to take on your way to world dominance is creating a plan to get you there.
A business plan is a detailed document that most business owners need to draft when seeking investment or financing. It’s a document that, when done right, convinces investors and lenders that the entrepreneur’s vision for a successful business has the research and numbers to back it up as a sound investment opportunity.
But before you can put together that winning plan, your business has to have a solid foundation first. This means partnering with an expert in business and tax planning, like the ones at Taxpage, to ensure that the business structure you register with the government makes sense, facilitates your vision and that you have a plan in place for your business operations to reduce your tax expense.
When that’s done, refer to this post to help you write a solid business plan and learn more about product market fit definition.
Common Sections of a Business Plan for Startups
A Business Description
Besides providing a brief backstory on the founder, a key element of this section includes how a need and a gap in the market to fill that need were identified. You must also then demonstrate the following:
- How your products or services fill that need.
- More detailed information on your product or service, how it works, any testing or research done to prove its effectiveness and any intellectual property protections in place.
You can also include subsections that describe how you produce and distribute your products or deliver your services, including brief explanations regarding suppliers, vendors, supply chains, manufacturing, equipment, personnel, etc.
A business description commonly also includes information on its legal structure, whether it’s a sole proprietorship, partnership or corporation and the tax, legal and financial advantages and liabilities of the business based on its structure. This is why it’s crucial to consult an expert in this area before you write a business plan and seek outside capital.
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Strategy and Market Research
This section is where you demonstrate the viability of your business by proving a demand for your product or service. It should include reliable data that shows the size of the market and its demographic and psychographic profiles.
You should also provide a SWOT analysis of your business, including information on your competitors and your unique value proposition, as well as marketing and pricing strategies.
The Management Team
This section shows how you’ve assembled a team of personnel with the right skills and experience to fulfill their roles and bring your vision to fruition.
Along with bios of your team, you can include an organizational flowchart highlighting key personnel in this section.
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A Financial Business Plan
For this section, you’ll need financial statements that tie the business plan together and prove its financial viability.
Some of the more common financial statements used here include:
- Cash Flow Statement that shows how cash flows in and out of the business every month to ensure there’s enough on hand to cover your expenses.
- Net Income Statement, which is calculated by subtracting interest, taxes, depreciation and amortization from your operating income to prove the business’s potential profitability.
- Balance Sheet that shows the business’s current assets and liabilities.
- Sales & Revenue Projections that are based on actual sales numbers.
Finally, when you’ve completed the business plan, go back and select the key takeaways from each section that you would like to highlight and include them in a one-page Executive Summary that you can attach as the front page of your business plan.