A business plan is useful for a projected small, medium-sized, or large business. There are much hidden facts that a business plan exposes during formulation and its enhancement. The components of business plan help to capture how a company intends to create value in people’s lives by solving their problems.
Components of Business Plan
1. Executive summary
The executive summary is a rich overview of what a business is. It features the mission statement, the vision statement, and organizational values. In the executive summary, a company states the goals and objectives it aims to attain by selling goods or services.
The executive summary elaborates on the value that a business creates in the market. It does so by identifying a problem that a business solves. The executive summary also highlights who are the target customers of a business.
2. Organization description
The description of an organization considers quite a lot. One, it is about the leadership of a company or a business. In a business plan, highlighting leadership style is important for knowledge purposes to all stakeholders. Here, the business plan also identifies how a business will be incorporated as a legal organization and the formal structure of operation that a business adopts.
This affects the type of investors attracted, the kind of applicable legal regulations, and the nature of business proceedings that a company can handle. Organizational description in the business plan highlight and explains how a company is interdependent on the external environment.
3. Market analysis
The market analysis examines the industry where the company will be operating. The market analysis could be intensive for some companies, and for others, it could be shallow. The depth of market analysis might depend on the size of the company’s efforts toward market analysis.
Market analysis helps to understand a company from the industry’s point of view. It brings the perception of what a company is in the industry against competitors. In a business plan, the depth of market analysis is determined by the core purpose of market analysis. For instance, the core purpose could be to understand competitors, learn more about customers, and study the overall business environment.
Sustainable business needs proper financial projections to be in place. Whether for a start-up or an established company, a business plan must clearly state where the company will get its financial support from. A business plan states how a company will raise funds and allocate the same to different business functions.
Funding is one of those components of a business plan directly related to survival. A business can survive for years without profits but not without funding.
5. Trade secrets
A trade secret is a confidential information a company holds and is used to compete favorably and strongly with direct and indirect competitors. The secret varies between companies because it depends on what a company values as its trade secrets.
For instance, a private company considers books of accounts as its trade secret, while a public company discloses its books of accounts to members of the public.
The law protects trade secrets against any copyright or infringement of trade secrets, otherwise called misappropriation. A business plan could have trade secrets, a declaration on how to share them, and whom to share them with.
Since a business plan is a guide, it stipulates wrong and right business proceedings. Ethics is not necessarily segmented in a business plan but constituent of every business department. Business plans highlight ethical and unethical business proceedings in different company departments.
7. Intellectual property
Intellectual property emphasizes the identity of a brand in the market. A business plan identifies intellectual property. Anything that qualifies in this category is communicated with relevant stakeholders to enhance the protection of such intellectual property.
Intellectual property can be summed up as a unique creation by and for the company. To understand, assume a data company. This company might team with software developers and develop a software solution for data analysis. The resultant software becomes the company’s intellectual property; it emanates from creative and innovative business works.
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