Whether yours is an emerging startup or a business trying to scale—a business plan is crucial to turning your business endeavors into success.
A well-crafted actionable plan develops strategies, streamlines operations, guides finances, and secures funding. It offers the direction necessary for staying focused and dedicated to your goals.
However, this is only true when your business plan is rooted in reality. A poorly developed plan derails progress and sets your business up for failure.
So what exactly is the secret to developing a truly successful business plan?
Is it a detailed financial forecast? A strong vision for the future? Or is it the combination of several essential elements working together?
Well, let’s understand the fundamentals, or as we say, the 5 key elements of a successful business plan with this blog post.
Let’s jump straight in.
5 key elements for a successful business plan
Every plan is unique, be it in terms of its structure, content, or the business aspects it addresses. However, if we were to observe a common pattern between all the successful plans, they have these 5 elements in common.
Key 1: Clear MVV (Mission, vision, and value statement)
A clear mission and vision statement offer a crisp and undiluted understanding of what your business is and why it exists. It helps the reader grasp the core message of your business quickly, without having to read a detailed business plan.
A vision isn’t just a statement to add to your business plan. It’s a foundation upon which you will develop your business goals, strategies, and tactics.
It’s a powerful PR and marketing tool that will effectively convey your business essence to the customers, investors, and other stakeholders.
Now, developing your MVV requires a clear understanding of the business’s core purpose, beliefs, and values.
To help you identify your purpose and values, try answering questions as simple as:
- What value do you bring to your stakeholders?
- What’s the purpose of your business?
Don’t indulge in the complexities of perfecting the words. Instead, focus on listing down the stakeholder’s pain points your business will address.
As for your ultimate vision, list down your long-term aspirations with the business. To articulate your vision better, try answering: what does success look like 10 years from now?
Once you have the core ideas for your vision statement, simplify it and condense your vision statement into a line or two.
Now there are many examples of a good vision statement. However, before we check them, here’s a vision statement for an energy company, a perfect example of how a vision statement shouldn’t be. (Yes, you read it right- shouldn’t be).
What’s wrong with this? It’s verbose and fails to convey clear business aspirations. Seems like a vision that was developed just for the sake of filling in a business plan.
Now, take a look at these examples:
- To make people happy: Disney
- To create a better everyday life for many people: Ikea
- Bringing inspiration and innovation to every athlete in the world: Nike
These are some brilliant vision statements of leading companies across the world. They’re crisp, bold, and not limited by hyper-specific outcomes.
Key 2: Comprehensive market analysis
A successful business plan is one that demonstrates a clear market opportunity for your business. A business plan that offers sufficient insight into the market, customers, and the competition.
Backed with data and expert analysis, this section helps with strategy formulation and decision-making. This section evolves with changing market conditions and influences the changes in other sections.
So, what exactly should you include in your comprehensive market analysis?
- A general industrial overview and a detailed niche market analysis.
- A clearly defined TAM (total addressable market), SAM (serviceable addressable market), and SOM (serviceable obtainable market).
- Buyer’s personification of your target market.
- Competitive landscape of your business.
- SWOT/PESTLE or related competitive framework analysis with your top competitors.
- Competitive advantage to turn your business successful.
In addition to this, a market analysis may also cover details about regulatory changes related to your market.
However, before you start writing your market analysis, determine whether your plan requires an in-depth analysis.
A business plan prepared for approaching an investor will require you to cover all the key aspects. However, if yours is an already established business analyzing a specific purpose (introducing a new product, making product changes, or entering a new market), you can steer away from a basic industrial overview and focus on trend analysis.
That said, market analysis is crucial for all sorts of business plans. How you structure this section doesn’t matter if yours is an internal use plan.
In terms of placing together your market analysis, visuals will have a more profound impact than pages of dense text. It will keep the readers engaged and explain high-value points of your analysis in an easy-to-absorb format.
Key 3: Strong financial projections
Projections are a crucial business plan component that demonstrates the financial feasibility and potential success of your business.
However, for projections to offer a sustainable and realistic picture, you must base them on hard data and metrics. Baseless assumptions and guesswork undermine the credibility of your business plan.
Established businesses can use historical data to forecast their sales, revenue, and cash flow. However, startups with no previous data can benchmark competitor’s data and industry standards to make educated guesses.
Now, forecasts should factor in various optimistic, worst-case, and aggressive scenarios to navigate unexpected challenges. This will help the investor evaluate your preparedness for meeting different market conditions.
Now, if you’re preparing a business plan for investors, here’s a checklist of all the financials they would need:
- Historic statements (income statement, cash flow statement, and balance sheets)
- Financial forecasts (3-5 years)
- Funding utilization plan
- Financial ratios
- Break-even analysis
- Startup cost
It’s important to understand these figures thoroughly as investors would have plenty of questions during the pitch.
That said, businesses should build forecasts for 3-5 years to get a thorough context of a business’s financial position in the future.
Key 4: Detailed marketing and sales strategy
This aspect of a business plan details how to attract your target market and convert them into your customers. Readers, especially your investors will look after this section to ensure your great idea has a great market and marketing plan.
Kevin Shahnazari, the CEO at FinlyWealth, suggests using customer journey maps to develop a highly practical sales and marketing strategy. According to him, journey mapping offers insights into the needs, behaviors, and pain points of the customers that might not seem obvious on a surface level.
He reveals finding their best acquisition tool (educational content) by mapping customer journeys. This new acquisition channel increased their web traffic (70%) and organic leads (40%), and reduced their customer support inquiries (20%) within a span of 6 months.
Now, this is just one of the many examples of how you could develop your sales and marketing plan.
Focusing on the sales plan, here are a few points your sales plan should touch on:
- Sales goals
- Sales channels
- Sales tools
- Sales budget
Your sales plan should sufficiently explain how you intend to convert your target market into customers and retain them.
As for your marketing plan, outline how you will market your business to reach customers at different points of their customer journey.
It should include,
- Marketing channel
- Marketing budget
- Marketing tools
- Review process
- Team
Place a huge emphasis on your brand image and convey it efficiently as you build your marketing plan.
Key 5: Solid operational plan
This part of the business plan outlines the actionable steps the business will take to turn its vision into a reality.
It offers a clear understanding of the workflows, logistics, and resources essential to perform day-to-day business operations. It also highlights the team responsibilities, key timelines, and supplier relationships, offering readers a complete overview of how the business functions.
Moreover, a well-planned operation demonstrates your preparedness to the reader. It shows that you’ve thought about every business aspect and are well-equipped to run a business.
It doesn’t matter whether you create a fully detailed operational plan or a rough 2-page plan outlining your business processes. As long as the operational plan acts as a roadmap, it will ensure alignment between your team and the business goals.
Conclusion
The key elements we’ve discussed indeed contribute to building a successful business plan. However, these aren’t the only elements your business plan should cover.
From a concise executive summary to an insightful products and services section, and a direct funding plan—a complete business plan goes beyond the basics.
Now, let’s help you write a business plan that fits your needs with the Upmetrics. The guided approach and AI-powered functionality of this tool streamline your business planning efforts, helping you prepare a fully detailed business plan in no time.
