Whether a first-time entrepreneur is opening a new business or a serial entrepreneur is working on his next venture, a business plan is often necessary. While creating a business plan is extensive and consists of many parts, it can help a firm structure itself better and showcase its mission and value to outsiders. With the potential such a plan offers, how can an entrepreneur develop a succinct, yet effective business plan?
Executive Summary Considerations
The primary mission of an Executive Summary is to provide a snapshot of the entire company, offering the reader, notably potential investors, an overview of a company’s value. It often explains what the business does, how it solves an existing problem and how the company will accomplish it. It also details the financial status of the business, including the amount of financing desired and the potential rate and timeline for investor return. Generally speaking, the length of an Executive Summary should not exceed one or two pages.
In addition, it’s important emphasize specific content within the Executive Summary based on the stage of the business. For example, newer companies should focus on the experience each founder brings to the organization. It also should feature a market analysis for the particular industry; how the venture addresses a particular industry need; and how the business' products or services will accomplish meeting that need.
For more established business entities, the Executive Summary can take a different form. It should begin with an overview of the business' function, and include formation dates, founder names and titles, the current number of workers, and addresses for the company's primary and satellite offices. Additional elements may include a discussion of recent growth, such as increasing profit margins or market share analysis. Provide a quick summary of product or service details, including any recent developments or innovations to existing products or services, with a summation of plans going forward.
Another important part of a business plan is to inform the reader, most often a potential investor, as to how capital will be used.
This section can be quite expansive because it covers how the individual product or service is produced from step A to step Z. Whether it's finding raw materials from a supplier, locating an office or factory to house equipment and employees, hiring employees or managing IT infrastructure, this part should be clearly detailed for external readers.
While it's possible to document every step or process, a good guide is to look at the particular industry and cover what's relevant to that industry. An example in the metal fabrication industry is to focus on inventory management and how to deal with commodity price fluctuations. While discussing major points such as labor is important, be sure to strike a balance to help answer questions readers may have that are specific to your industry.
Each business plan is different for each business owner and industry. Making the most of a business plan benefits owners by increasing their chance of survival while at the same time communicating their mission in order to attract the right investors.