Understanding the components of a successful business plan

A business plan can help people succeed in reaching their goals but is important to have a good understanding of what it entails.

There are many things to do when people in Annapolis are preparing to start a new business and one of those tasks includes the composing of a business plan. This document acts as a written analysis of what the company's overall purpose is, its goals and how it will achieve these goals.

When drafting a business plan, people should make sure that they keep their objectives reasonable. It can be tempting to create a business plan that covers a 10, 15 or 20-year span, but this could create unnecessary pressure and as most people know from their life experiences, things can change. The U.S. Small Business Administration states that people should limit their plan to no more than five years.

Who the company is

One of the first things that people need to set out in their plan, is what their company is all about. According to the SBA, this includes the target consumer or client that the company will be marketing its product or service to, how the company's product or service is different from others out there, and what the company's purpose is.

For example, a clothing company may state in its business plan that it is targeting expecting mothers with a line of active wear. The active wear differs from other products on the market due to a special material that is intended to provide extra support to pregnant women as they work out or run errands. The company came about as a result of personal experience with the issue.

Funding/financial information

Businesses cannot become successful if the owners do not have sufficient funding. This section should cover how the business will be financed or describe how the owners intend to obtain the financing they need. For instance, the owners may plan on seeking investors, use family loans, form partnerships or obtain a bank loan to get the company started. It also may be helpful to include a breakdown of the overall costs the company needs for launching or to booster growth.

Analysis of the market

An analysis of the market that the business is entering provides owners, investors and others a clear picture of the needs for the business. This should include information such as the following:

  • Size of the market the business is targeting
  • Restrictions based on government or customer requirements
  • The needs of customers the business is targeting
  • Pricing guidelines, planned discounts and targets for gross margin
  • Market size
  • Analysis of competitors already in the market

Additionally, this section should include an overall description of the industry itself that looks at growth rates, trends, current size and where the industry is headed.

Getting the right start

Starting a successful business in Maryland requires careful thought and planning. Business plans can be quite complex, depending on the nature of the company and the product or service it is providing. As such, people may find it helpful to meet with an experienced business law attorney who can guide them through the process.