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How is Business Plan Relevant for Business and what are its Essential Components?

Divyanshu Gupta

| Updated: Mar 22, 2020 | Category: Business Plan

When a business is about to start, it requires tremendous effort and vigour of an owner so that he can initiate the business and sustain it in future. One such task in beginning a business is a Business Plan. You must be wondering what Business Plan is? How to go about it? If these types of issues take your anxiety to the next level and you are keen to understand the dynamics of Business Plan, then you are accessing the right document. It presents how a Business Plan is relevant, and what are the essential components of Business Plan with special emphasis on importance of each component of Business Plan

Overview of Business Plan

Before proceeding, it is significant to know what Business Plan is? Business Plan is primarily a written document which presents a layout or a blueprint that aids in evaluating things. It depicts fact-based information in the form of Statistics. Additionally, it makes you aware of objectives as well as goals. One can keep track of firm’s progress through it too. Moreover, it also highlights the deviation which needs an urgent course of action to overcome it. An accurate picture of Company can be presented through it. It is not compulsory but becomes essential due to the attributes it imbibes. It is not only helpful for the owner himself but the stakeholders like Partners as well as potential investors. It won’t be wrong to say that it presents a thought process of the firm in front of others. By now, you must have a fair idea on the overview of a Business Plan. Hence, it becomes a strategic tool for a firm. The brief action of the business can be presented as it is entirely dependent on nature, size and other attributes.

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Important components of Business Plan

Since Business Plan presents a layout of how business functions, it includes various components that business is required to incorporate in it and execute for its success. The essential components of Business Plan are listed below-

Executive Summary

The first and foremost component in any Business Plan is Executive Summary. Executive Summary is nothing but a synopsis of expectation of business. A compelling Business Plan is an Executive Summary. It highlights the Mission statement of the firm. Additionally, it depicts a short product as well as a service description. It will be better if you incorporate the purpose of establishing a business here. The brief experience of yourself in which industry you want to enter also has its importance and should be highlighted too.

Description of Company

The second component of Business Plan is a description of Company which is an integral part of Business Plan. The vital information about the business is highlighted. It is also necessary to be aware of the goal of the business as it’s the key attribute which is required to be exhibited here. The information on potential customers that business is likely to serve has its significance due to which it is also required to be highlighted too. Special emphasis on how the firm will stand apart from others also gains relevance and becomes important vis-a-vis it is shown. An interesting attribute of the description of Company demands the firm to show how the products, as well as services that it is likely to offer are useful for the customers that it wants to tap.

Analysis of market

The third component of Business Plan is an analysis of the market. It refers to in-depth knowledge of the industry in which you want to enter. The in’s as well as out’s of the industry also becomes essential and proves beneficial for the firm. The data as well as statistics are revealed too. Moreover, it becomes imperative to show what the standing of the market is, where is it expected to go. It should further mention how well can your Company function in the industry. The income levels of the target consumer always gain particular importance and are required to be disclosed for a detailed analysis of the market.

Analysis of competition

The fourth component of Business Plan starts with an analysis of competition. A Business Plan needs a clear elaborated differentiation of your business with the other firms in the same industry. It becomes even better if you include a detailed comparison with the firms who are in indirect competition with your firm. Every owner knows the strengths and weaknesses of his firm better than anyone else. Therefore Business Plan must incorporate the firm’s strengths and weaknesses of the firm.

Management’s description   

The fifth component of the Business Plan initiates with Management’s description which includes the setup of the organization as it is entirely dependent on the Business Plan. The skill sets of Managers of Company are emphasized. Additionally, it consists of the responsibilities of Managers of business too. The hierarchy of command can be highlighted with the help of a diagram to have a clear picture. It is essential to define the structure of the organization i.e. which type of business will it be? The members are ascertained if a firm wants Board of Directors.

Product and service related information

The sixth component of Business Plan initiates with the information related to the products as well as services. In this attribute, the sharing of information about the suppliers takes place. The cost of producing is also revealed here. It becomes inevitable for the firm to disclose the sources from where funds can be raised. The information related to Copyright/ Patent is also required to be depicted.

Plan of Marketing

The seventh component of Business Pan is all about creating and executing the strategy. It implies putting your products and services for sale in front of consumers. It provides detailed information on how the products will be promoted. It also exhibits the budget that you define for the promotion of the products and services.

Strategy of Sales

The eighth component of Business Plan has its importance as it will give a clear picture of how products will be sold as it defines the strategy of sales. It is in your interest, if you provide a detail of the strategy of sales for each product. The planning related to sales staff impacts sales in a big way. It is due to this reason it must be mentioned what will be the staff quantity of sales and from where will the funds be procured to pay them.

Source and application of funds

The ninth component of Business Plan is all about elaborated sources of funds from where the capital can be raised. Not only this, it becomes imperative to how a firm utilizes the funds that are procured from various sources are also listed. If any project needs more funds, there has to be a special emphasis on it.

Projections related to finance

The tenth component of Business Plan is about disclosing financial figures. It emphasizes on the revenue figures that you are likely to attain in the first year. Market research that you conducted in Business Plan plays a significant role as it becomes the basis for this step. It reveals vital information on what you want to achieve in terms of financial figures. One can get a clear picture if it portrays anticipated earnings too.

Conclusion

In a nutshell, Business Plan is a written document which is comprehensive as it provides detailed information on each attribute so that business can be executed successfully.

If you have any query related to Business Plan or have any concern related to it, get in touch with Swarit Advisors.
Divyanshu Gupta

A prolific writer with more than 10 years of experience across various industries like Ecommerce, Publication Houses, Information Technology and Digital Advertising firm. Good amount of knowledge for writing on various topics gives me an edge and enables to mentor and guide others in the same field. The passion to never say no gets me going and motivates me to set new benchmark for myself and perform with great zeal and endeavour.

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