7 Components of a business plan

Writing business plan
A business plan helps you to navigate through uncharted territory. PHOTO/FILE
Writing a business plan is an important endeavour for every entrepreneur. Here are the seven major sections of a good business plan.

1.) Introduction
The introduction is a very important section of your business plan. It should contain the introductory letter, cover page, table of contents and the executive summary.

(a) Introductory letter – It should briefly state why you are submitting the plan to the receiver.
(b) Cover page – It should clearly identify both you and your company. It must include your contact details.
(c) Table of content – It should clearly outline the main sections and subsections of your business plan.
(d) Executive summary – It should offer a general overview of your business plan.

2.) Business Description
This section should describe your business, differentiate the business from competitors and  describe the legal structure of the business (e.g. partnership). It should also include a summary of the management team’s credentials, a summary of the projected financial performance and the amount of money you are seeking and for what purpose.

3.) Market Analysis
This section describes the sector in which your business will operate in, and why you think your business is viable. It includes business summary and history, sector overview and position in the sector.
(a) Business summary & history – Outlines the work you have done since the start of your business.
(b) Sector overview – Describes the sector you will be working in.
(c) Position in the sector – Describes the product or service you will be selling and what makes it unique.

4.) Product Development / Operations
This is where you address the day-to-day running of your business. This section should have two subsections: Stage of development and production process.
(a) Stage of development – Describe how far you have gone in the planning of your business and what remains to be done.
(b) Production process – Describe how your business operates. This allows you to show that you understand what your business entails.

5.) Sales and Marketing Plan
This should include your strategies for selling as well as strategies to take on the competition in your market. It should include the target market, product/service, pricing strategy, sales/distribution and advertising plan.
(a)Target market- An outline of your market including the total size of the target market, trends affecting that market and a summary of your competition.
(b) Product/services – Description of your product or services (both features and benefits). You should also mention the uniqueness of the product/service.
(c) Pricing – Establish a reasonable price for your products or services. The price you set should enable you to get some fair profit.
(d) Sales and distribution – Describe how the transaction between you and your client will be done. You should also mention how you plan to distribute your products/services.
(e) Advertising – Describe how you will promote your products to your customers and potential customers (e.g. classified ads, newsletters).

6.) The Team
This section outlines the skills of your team members and how the skills will help your business to succeed. It should include management team profiles and ownership structure, business advisers, professional service providers (e.g. lawyers, bankers) and details of other employees your business may need to hire.

7.) Finance
This section helps determine how viable your business is in terms of money. You need to determine the type and the amount of expenses the business will incur. Using this information you will be able to prepare: Income statement, Cash flow statement and Balance sheet – the main financial statements for your business.