Important Aspects in a Business Plan
When starting a new business, it's essential that you have a good business plan in place. Your business plan gives direction and provides a framework for internal members of your organization. Your business plan plays a significant role in your ability to attract outside investors. The absence of a well thought out business plan can mean certain failure for your business. Here are the important aspects in a business plan.
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Mission Statement
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One of the first things you should do when writing a business plan is to state your company's mission in a clear, concise manner. Your company's mission statement is supposed to identify the reason your company exists. Your mission statement should communicate the philosophy of your company, or say something about your company's core beliefs and values.
Marketing Plan
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The marketing section of your business plan is perhaps the most important aspect of your business plan. For that reason, it's imperative that you conduct thorough research. In this section, you'll need to identify your target market and form your marketing and advertising strategy.
You'll need to determine your best medium for advertising your products, whether it be radio, TV, Internet, or direct mail. Your marketing plan should indicate your pricing strategy. For example, will you price your product or service to appeal to high- or low-end consumers.
Your marketing plan should include a budget detailing the manner in which advertising dollars are to be allocated.
If you're to create a successful marketing plan, you must identify your competitors. Conduct research to determine how your product differs from similar products found in the marketplace. You must clearly identify your company's competitive advantage.
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Management Information
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Organizational information is an important aspect of your business plan. It's important for members of your company and for external investors to identify who the leaders of your company are. This section can identify key principles, and decision makers.
Furthermore, the management section of your business plan should include key members of your research and development team. This indicates the parties responsible for coming up with new products for your business.
Financial Information
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The financial section of your business plan will play a key role in attracting new investors to your company. This is where you can include your current Statement of Cash Flow, Income Statement, and Balance Sheet.
If you're a new business, your financial statements will likely be pro forma statements, meaning the statements are based on assumptions. If you have an existing business, you'll be able to use information from your actual financial statements. You'll want to include an analysis of your company's financial ratios. Popular financial ratios are asset turnover, debt to equity, and gross profit margin.
Projections
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Your business plan should include a section for your projections. Your projections are based strictly on a set of assumptions. For example, assuming you'll make a certain number of sales results in the assumption that you'll generate a certain income.
Your assumptions should be based on research you've conducted regarding your pricing, advertising, and competitors.
You should do projections based on short and long-term analysis. Short-term projections are usually for 12 months or less. Your long-range projections may be for three or five years. Two of the biggest risks you run in creating projections is underestimating costs and overestimating sales. This may stem from overvaluing your product or service in the marketplace.
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