Business plans can be a challenge to wrap your head around, no doubt about it. As we’ve said in our other articles, though, business plans are essential to business success.
Although you can survive without one, business plans can give you a fantastic foundation to work with when things get hectic. You can always look back at your plans and ground yourself in your original goals, plans, and focus.
You’ve got this.
BUSINESS PLAN OVERVIEW
Here’s a comprehensive overview of all the parts of a business plan. No need to stress, though! While a business plan is comprehensive, it’s not extremely detailed. A basic overview of everything will make running a business easy.
Take a look at the main parts of a full, comprehensive business plan. You’ve got a total of around 10 sections, and in this article we’ll be delving deep into the second half of the business plan.
If you’d like to understand the full business plan, we’ve also made a guide for the first 3 sections of the business plan.
BUSINESS PLAN DETAILED
While it would be easiest for everyone to give their products and services for free, we’ve gotta make a revenue somehow. We need to be able to pay our employees, gather supplies and resources, and make all this business shenanigans worthwhile, don’t we?
Different companies have different business models to get revenue. These are called pricing strategies.
Facebook and Google are examples of businesses that rely on revenue from advertising. There aren’t any subscriptions to worry about as a user, just different kinds of adverts.
Meanwhile, companies like GoStartup rely on a subscription-based revenue stream. We’ve got a free tier to our platform and an affordable premium tier for extra features. This premium tier gives us the revenue we need to continue growing and supporting our users.
Find a pricing strategy that best suits you, whether that be through advertising, subscription, or something else!
5. Location or proposed location
Being able to establish your business in the best location possible can really help a business. Big tech companies like Apple have their headquarters in the United States, but that doesn’t mean everyone needs to be there for tech.
In fact, the competition might be too harsh to break through with your great idea.
Take a good look at different locations around the world if moving is in your budget, your interest, and if there are more opportunities elsewhere. Sometimes a fantastic idea in the wrong place might not give it the chance to truly flourish.
Because of the great conditions to found a company, GoStartup was founded in Helsinki, Finland, by three friends who met in Malaysia.
After a lot of research about the potential places the company could be established, our CEO Sami thought Helsinki would have the most support and best conditions for our product to flourish.
Based on this, we recommend that you ask yourself where the best location is for your company office.
6. Distribution Channel Assessment
This section of the business plan can result in a big, multi section table that can be confusing to begin with. If distribution channels as a concept are unfamiliar to you, we’ve got you covered.
Distribution channels are ways of spreading your product or service (distributing) to customers. All sorts of businesses have all sorts of ways of distributing their services and products.
What’s important in this part of the business plan is identifying 2-3 distribution channels to help you get an idea of how you’ll get the world to become aware of what you’ve come up with!
The four types of distribution channel: direct, retail, wholesale, and agent.
Using these channels, you can get a better idea of how you’ll communicate to customers, but you need to take an extra step further to really solidify your plan. Saying that you will have a direct channel to connect to customers is not as effective as identifying cold emailing as a channel.
Try to brainstorm as many unique distribution channels you can use for your business specifically.
Once you’ve identified these channels, you will need to evaluate the importance of each and how easy (or difficult) it will be to activate that channel.
Your evaluation could include some analysis on:
This is a chance to look at how far you’ve come and how far you want to go. You can clearly separate your milestones into 3 sections: what you’ve accomplished so far (even your small achievements are a great place to start!), what goals you’re planning to achieve by the next year, and then another section for the following year.
Here are some business milestone examples:
Milestones can relate to the partnerships you might have already secured, the amount of customers you aim to get, a rough estimate on your potential revenue, and your possible plans for expansion.
It goes without saying that milestones are super dependent on the type of business you’ve got and what products or services you’re offering!
8. 12-month forecast
Now is the time to get down to business.
Towards the end of the business plan, the business projections and predictions are brought to light. In the 12-month forecast, you’ll be taking a look at what goals you are looking to achieve and when.
Try to at least split the year into quarters and set specific, measurable goals for each quarter. Keep in mind that the sales forecast will be detailed at the end of the business plan as part of the financial forecast.
A great way to approach a 12-month forecast is to find out what activities you’ll be doing and the specific months they’ll take place in.
This 12-month forecast isn’t set in stone. Believe us, a lot can change in just a few short months and the plan might half go out the window. However, in the case an investor wants to get a hold of your business plan before investing in you and your ideas, your forecast should still be as realistic as possible.
9. Operational Plan
The operational plan is the way in which you’ll set your business plan in motion, if you haven’t already. There are many elements to an operational plan, ranging from how you’ll ensure your product is at its best quality, where you’ll be running your business from, and the employees you’re planning on hiring.
In the first part of your operational plan, go into detail about how your product or service is developed and how it is deployed.
In the next part of your operational plan, come up with 5 to 6 ways your business will ensure that any problems with your products or services are being met. Will you look at reviews? Where will these reviews come from? Will you conduct some form of testing to make sure your product or service performs the way it should?
Although we naturally want to believe what we produce is nearly faultless, testing is a surefire way to catch any missteps before they happen or issues you didn’t even initially see!
For SaaS products like GoStartup, there are all sorts of testing you can do for quality assurance. Some examples of product quality testing include unit testing, integration testing, system testing, acceptance testing, and penetration testing, among plenty of others.
Take a look at your product or service and find all the sorts of ways you can test it!
10. Financial Plan
Financial plan. Financial forecast. Financial projection. Countless ways of referring to the same thing: looking at what will happen to your finances in the future.
Because the world runs on money, a financial plan is fundamental in making your business successful. Try to make a personal rundown of your expenses and what you predict will happen with your revenue (and your potential profit!). This financial plan should account for the upcoming 5 years, not too long-term or short-term.
Somewhere in the middle will give you a more realistic idea of what to expect, and ideally during this period you should get a comfortable profit.
In the first year or two, it’s not expected that you’ve gotten to break-even. You can totally be on minus at the beginning as long as it’s justified with some round-about calculations.