Essay: Components of a business plan

This is why banks and investors ask for a business plan.

It may surprise you to know that:

According to common statistics, within the first 5 years of operation, 90% of businesses fail.

And of the remaining 10%, only 1 out of 10 last for more than five years.

So, what makes most businesses fail will others thrive?.

It may be due to lack of enthusiasm to succeed, leadership failure, picking the Wrong business partners, or even mismanagement of business funds.

But the most significant reason is the lack of a business plan.

The importance of a business plan cannot be understated.

In this article, I'm going to show you how you can put your business plan together and walk you through the major Components of a business plan.

Here are the components of a business plan:

Now depending of the type of business you’re running, not all of these elements will be relevant.

However, these are the major components of a business plan and why you need to put them in place.

Let’s look at these components in detail:

1) Introduction & company overview

This is a very important component of a business plan where you give a comprehensive summary of your business.

In writing a company overview, don’t be too worried about the words that summarize your business.

You know what your business is all about.

Right?.

In writing a company overview, you should include the following sections:

A company overview should include the basic details of your business such as your business name, address, website address(if you have one) and your contact details.

You should also give your legal status whether you are operating as a sole trader, a partnership, or limited company.

In this section, you'll need to explain what your business is about, what you want to achieve, and how you plan to measure your success.

You should also list the founders, owners, and outstanding members of your business.

2) Products and service description

Your business plan needs to clearly define your product.

This is where you describe the product or service you are offering and who you are selling it to.

Explain your product in simple non technical terms.

In this section, you articulate the problem that you solve.

You need to define who has the problem and how you are going to solve it.

spell out what your typical customers look like.

Is it companies, is it individuals.

Also, state how big this problem is and how it affects your customers.

Do they have a time problem, a cost problem, or is a quality issue with the product that they are already getting and you can help them improve that quality?.

When you write this problem statement, you should be able to take it to your target customers and they should read it and say “I have that problem, please come fix it”.

That's where the demand for your product or service is going to come from.

The key here is to keep your focus on the benefits your customers get from your product or service, rather than just saying what the product is or what it does.

You'll also want to explain what makes you different and what makes you stand out from your competitors.

This is known as your unique selling proposition(USP).

Other information contained in this section includes:

These stages include the seed and development stage, the start-up stage, the growth and development stage, the expansion stage, and the maturity stage.

The stage in which your business is should be stated in this section.

3) Industry and market analysis

This is where you demonstrate that you’ve researched your market and understand the environment that you are working in.

A significant part of this section is about identifying your target markets showing who and where your customers are and how you can satisfy their needs.

You should also include a competitor analysis and explain how you plan to come compete in this market.