The Business Plan is the reference document. It will give a helpful idea of the project in question on the company’s profitability and development. Through this document, an investor will decide whether or not to go further with the entrepreneur. So, let’s discuss what to include in a business plan.
What should you put in a business plan?
Your business plan should contain a specific amount of information. It has different types depending on the component they relate: financial or descriptive. Here is a list of information to put in your business plan.
What to include in the descriptive part of the business plan?
The descriptive part of a business plan is broken down into several sections. That should be adapted according to the nature of your project. Here is the list of the main information to put there.
This is the slogan of your business plan (referred to in practice as the “executive summary”). It can be compared to the movie “trailer”. In this part, you should only go over the key points of your project. This is a sort of summary of the descriptive and financial parts. Generally, it is advisable to write the operational summary last, after constructing the financial tables and writing all the other chapters of the descriptive part.
The business model
The business model corresponds to the economic model that you have chosen to carry out your activity. To determine your business model, you will need to analyze your market, offer a range of products and services that stand out from your competitors. Moreover, adopt a specific strategic positioning.
Products and services
Here you will present the products or services that you are going to offer to your customers. Do not go into too much technical detail. Because, unless you come across a specialist, your interlocutor will not read this part. You will be able to indicate the different ranges offered as well as the main characteristics.
It is impossible to build a business plan without first analyzing the market; you are going to enter. You must first identify the market in which you will operate (its size, its evolution, and its overall turnover). Besides, analyze your competitors with precision by answering the following questions in particular:
- What are the assets that I must have to survive there?
- How intense is the competition?
- Are there any barriers to entry?
- How are and can my competitors react?
- What will be my strengths and weaknesses?
Once the market has been identified and analyzed, you need to define your strategy. How do you plan to differentiate yourself from your competitors in the eyes of your customers? Are you going to tackle a niche market? Or are you going to offer a product at a discounted price and of equivalent quality as your competitors? You will also present your objectives in quantitative terms, your marketing and operational plan, and your offer’s distribution channels.
The Management team
In this section, you must present the team that is the leading player in your project: yourself, your possible partners, your employees, and all other key people in your project.
Do you wish to carry out your activity in your own name? This is where it will need to be clarified. Therefore, the legal structure will be indicated there, along with the main characteristics of your future entity: the amount of share capital, distribution, corporate officers, powers granted, etc. Also mention all the specific features of your project that have an impact on the legal level: the creation of preferred shares, the introduction of an exclusion clause, establishment of ‘a shareholders’ agreement.
What to include in the financial part of the business plan?
The financial part of a business plan is more challenging to tackle for those new to the subject. Since it involves fairly technical concepts in accounting – management, you will have to build your financial tables there. The most used are the income statement, the balance sheet, the financing plan, and the cash budget.
The income statement
The provisional income statement is a financial table. It will allow you to determine whether your company has created wealth during a period called the fiscal year. It compares products (turnover, subsidies) with expenses (purchases of goods, subcontracting, taxes and duties, salaries, and social charges for staff and managers and financial interests) to achieve a positive result or negative.
The Balance Sheet
The forecast balance sheet is a table that reflects the assets of your company at the end of each of your forecast financial years. On the one hand, it will identify all the elements that your business will have( the assets), and on the other, all that it owes (it’s liabilities). The assets will include your investments, your stocks, your receivables, and your cash, the amount of share capital, your supplier debts, your tax and social debts, and your financial debts.
The financing plan
The most important statement when applying for a bank loan is the provisional financing plan. It summarizes all of your financial needs (investments, working capital requirements, and loan repayment). It is essential since it allows you to prove that your project is financially balanced.
The cash flow statement
The cash flow table highlights, as its name suggests, the expected level of your cash flow. You will have to list all your receipts there and subtract all your payments from this amount. The result will give you the statement of your business’s net cash flow.
The other tables of the business plan
You can insert as many financial tables as you want in your business plan. However, we recommend that you limit their number. This is because the more items there are, the more likely you will lose your reader along the way. The main annex tables inserted in a business plan are:
- The breakeven point,
- The table of intermediate management balances,
- The VAT table,
- The summary table of investments and financing.