Having a high quality business plan is not only for investors, but also an affirmation of the original intention of starting a business. The opening statement of Ernst & Young’s Business Plan Guidelines explains:

A good business plan can help to make a good business credible, understandable, and attractive to someone who is unfamiliar with the business. Writing a good business plan can’t guarantee success, but it can go a long way toward reducing the odds of failure.

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Through a comprehensive business plan, the business owner can demonstrate the business idea and the development blueprint, also to highlight the professionalism and the market value of the company. And what exactly does a perfect business plan need to include?

1. Business Overview

As the introduction, this section showcases the background, briefly explaining the business purpose, business operation model, specialties, target customers, and competitive advantages and uniqueness of the brand. This section provides the investors with the business background and path the way for the following discussion.

2. Product/service, and Market Analysis

This section provides a clear introduction of product/service features, selling points, and advantages, as well as detailed market analysis, including industry overview, market demand, and analysis of existing competitors. It is key to bring out the market value and competitive advantages of the product/service, which can demonstrate the business opportunities.

3. Development Blueprint and Strategy

Subsequently, it is necessary to set out the development roadmap for the product/service and describe the operating strategies that will be adopted. You may start writing this section from the “Marketing 4P” strategy, namely “Product/Service”, “Pricing”, “Promotion”, and “Place”.

Through the 4P marketing strategy, you can elaborate on the preliminary preparation of the product/service, and explain which channels will be used to launch the market, and what strategies will be adopted to make the target segments know the brand and then buy your product. It’s recommended to set short-, medium-, and long-term business goals, and predict the business goals and strategic adjustments at each stage of the business in response to the market growth and market share, so as to make the business plan more comprehensive and sustainable.

4. Company Structure

This section introduces the company structure, specifies what team members will lead and implement the plan, including the background of the leadership team and the qualifications of the executive team. It is suggested that when writing the profile of each key member, you can explain their value and how their experience and qualifications can benefit the company’s growth according to the development blueprint. If your business requires a licence or copyright application, or there will be a need to expand the team structure in the future (such as hiring an accountant/legal consultant, etc.), it should be mentioned in this section, so as to predict the future expenses. This will be one of the important pieces of information that investors need to know.

5. Operation Plan and Risk Assessment

This section focuses on the implementation details, including operating policy, production management, human resources and financial management, etc. For example, if the business is related to retail products, the implementation details of production, suppliers, quality control, packaging and marketing strategies, etc. should be mentioned. It’s suggested to predict the potential risks and provide the specific contingency measures. Also, you can specify the manpower management policy and the cost management, so as to provide a clear picture of every expenditure in business operations as reference.

6. Capital Structure, Financial Status and Forecast

This section explains the capital and financial situation to show the feasibility of the development plan. In addition to listing the current capital structure and sources of funds, it is necessary to provide income statements, cash flow statements, and balance sheets for the past and next three years to show the current financial situation and future forecasts. If there’re financing needs for fundraising, it’s required to mention the implementation progress and capital needs, together with the profit and loss progress forecast as reference.

7. Exit Mechanism

If the business plan is for investors, an “exit mechanism” must also be included to explain to investors the methods of exiting, such as equity transfer, equity repurchase, profit distribution, stock listing, etc.

Pain points is the key of success

There are many templates available for writing a business plan, and it is not difficult for business owners to get some references. The key to the success of a business plan is whether the business owner can explain that the business has grasped a good opportunity or pain point in the market, and has enough ability to develop products or services that can seize this opportunity and create profits. Customer pain points are the cornerstone of entrepreneurship, as well as the source of profit and growth momentum.

In addition, the entire proposal needs to be logical and consistent, and avoid being too ideal. While having a vision is important, a proposal needs to be grounded in research and data to convince investors.

Is your business plan ready?