Business Plan Template
A business plan is one of the most important business documents for any business. Entrepreneurs starting a new business and business owners managing an existing business require a well defined business plan to efficiently manage the business. Business plans are dynamic documents which would change over time as the business and the operating environment evolves. Hence, it is important to regularly update the business plan and keep it current. Some of the major uses for a business plan are i) obtaining bank loan, ii) raising equity funding and iii) benchmarking. In this article, we look at how to draft a business plan and some of the major areas that must be addressed in a business plan.
Drafting Business Plan
A well drafted business plan would address various aspects pertaining to the business. In case the business plan is to be submitted to the bank or private equity firms, it is better to have the business plan prepared by an experienced financial professional.
It is better to break-up the business plan into various segments centered around themes. Then each area surrounding the theme can be addressed in that segment. Drafting a business plan with this structure would ensure that the business plan has a well structured format and good flow of thoughts. Some of the major areas that must be addressed in the business plan are:
- Team – Promoter Information.
- Business – Mission and vision of the business.
- Problem – What is the problem the business is trying to address?
- Solution – What is the proposed solutions or business model?
- Market – How big is the market?
- Competition – How do you plan to compete against existing solutions?
- Financials – What is present and projected financial performance?
- Milestones – What are the proposed milestones the business must achieve?
While addressing individual questions in a segment, it is important to keep the answers short and succinct. Preferably each response should be between 2 – 5 sentences. It is also not necessary to address each of the questions listed below. The following questions are just a guide to the areas that must be addressed in the business plan.
Business Plan – Team or Promoter Information
The following are some of the areas that must be answered in the promoter overview section:
- Who are the founders and/or main team members?
- Details about the top-tier executives.
- What is their educational background?
- What is their work experience?
- How do they add value to the team?
- What skill sets do the present team member possess?
- Are there any gaps in particular skill sets that must be filled?
- What is the team size?
Business Plan – Business Overview
The following are some of the areas that must be answered in the business overview section:
- When was the business started or when will it be started?
- What is the mission of the company?
- What is the vision of the company?
- What are some of the products or services offered by the business?
- How does your business make money?
- Has the business received any awards or certifications?
Business Plan – Problem Overview
The following are some of the areas that must be answered in the problem overview section:
- What is the problem you are trying to solve or need that you are trying to address?
- What is the current pain points for the customer?
- How is the pain point currently being addressed by the customer?
Business Plan – Solution Overview
The following are some of the areas that must be answered in the solution overview section:
- How does your business solve those pain points?
- Why should the customers choose your solution?
- Examples on how your company will address the customer needs.
- How enticing is your value proposition from a customer’s perspective?
- Can your solution be scaled?
Business Plan – Market Overview
The following are some of the areas that must be answered in the market overview section:
- Is your business model B2B or B2C or others?
- What is the size of the market your company is directly addressing
- What is the maximum revenue potential of your business?
- What is the markets growth potential?
- How much market share can your business command?
Business Plan – Competition Overview
The following are some of the questions that must be answered in the market overview section:
- Who are your competitors?
- How do you differentiate yourself from your competitors?
- What are the major threats from your competitors?
- How do you plan to address threats from your competitors?
- What is your businesses competitive edge?
Business Plan – Financials Overview
The following are some of the areas that must be answered in the financials overview section:
- Actual financial performance, if any.
- Projected financial performance for a minimum of three years.
- Projected financial statements including Profit & Loss Accounts and Balance Sheet for three years.
- Detailed assumptions based on which the financial performance has been calculated.
- Amount of investment or loan required?
- How will be additional capital be invested?
- Is your business breaking even? How long will it take to get there?
- What would make your company run out of cash, and what does the worst-case scenario look like?
- Details about the shareholding of the company.
- Key financial rations like Current Ratio, Debt to Equity, Profitability, etc.,
Business Plan – Milestones Overview
The following are some of the areas that must be answered in the milestones overview section:
- What are some of the key milestones you have achieved in the past?
- What are some of the key milestones you will achieve in the next 1 to 2 years?
- What is your product roadmap?
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