Think about your hand. It has five fingers, right (hopefully)? Or just imagine you have five fingers. In the same way I want you to know that there are five parts to a business plan:
1. The Summary; also called “Executive Summary” or “Introduction”
2. The Marketing Plan
3. Operations Plan
4. Financial Plan
These are the names I have used and it is easy for me to remember them.
What Does Each Name Stand For:
1. The Marketing Plan – “What I Want To Do” – What type of business are you wanting to start? What market do you want to start your business in? Who do you want to cater to?
2. The Operation Plan – “How I Am Going To Do It” – What kind of business structure do I need for this enterprise? Who do I need to network with? Do I need a mentor?
3. The Financial Plan – “What It Will Cost To Do It” – What are the costs of production, cost of sales or monthly expenses? How much profit will the business make in 12 months?
Part 1: Marketing Plan
The marketing plan, when not written correctly, has far reaching consequences:
1. If the marketing plan is wrong, then every other part of the business plan will be wrong. i.e. if you create a product that people do not want, then the way you plan to structure the business (Operations) and what you think it will cost (Financial) will be wrong.
2. If the information you have about who your customers are is wrong then the business will not work.
3. If the information you have about your competitors are wrong then the business will struggle.
4. If the way you have defined your market is wrong then the whole business will collapse like a wobbly stool!
Trust me when I say the Marketing Plan is the most important part of the business plan.
What Is Included In The Marketing Plan?
Industry overview – Past, Present & Future
a. Let’s say you want to start a business selling baby food. Your Industry overview is the information you can find out that relates to the overall food industry. Information such as: what has happened in the past to food consumption, how much does the average household spend on food and what are the projections for the consumption of food? How many babies are born in your area; nationally or internationally? (Don’t worry this information is readily available online and at your Business Libraries; start there.)
b. Industry Overview is important because it exposes you to vital trends that may affect your business. Some businesses are so seasonal that this information can make or break the business.
Sector overview: – Past, Present & Future
a. Using the same Baby food sales business example: Baby Food is a sector within the Food Industry so this business will need to know how much food babies consumed in the past, what they are consuming now and what they are likely to be consuming in the future. You might want to know an estimate of how many children are born per year and what the projections are for the following 10-20 years.
b. Remember most businesses never consider the future. They are too busy trying to deal with the day to day aspect that they are not planning for the future. Do not acquire this mindset. Writing your business plan offers you the opportunity to think and plan ahead and position your business greater than what your competitors do!