Video: What components to include in your Business Plan

As you start working on your business, plan, it is important to know the different components of what to include and why.

You may already know that there are so many different versions of a business plan out there. You have the one-page plans; just the marketing plans; operational plans, funding focused plans, and these all vary, but it’s important to understand the purpose of your plan and why you are writing it before you get into it.

Understanding the purpose will help outline how you gear your plan toward that specific focus.

So let’s take some time together and see the different types of business plans and what to include in most of them!

This video is part of the small business video series, which you can access here to learn more about starting up, building a business plan, finding funding, and more.

The Different Types of Business Plans

Depending on your reason for writing a business plan, you may have to write a plan that is unique to your situation.

1. Operational business plans

2. Funding-focused business plans

3. Business sale plans

4. One-Pagers

5. Technical business plans

6. Financial Plans

There are different types of business plans, and they all may be different in terms of the information that they may ask for.

The most common plans will be the operational plans, or the funding focused business plans. These traditionally are the ones that most people will write for their business.

The operational business plans are your traditional plans. This type of plan will be a very detailed and thorough plan, explaining every detail of the business’s operation.

In this type of plan, a business owner may refer back to it as they operate the business, as it will cover the operating procedures, sort of like a road map to the success of your business.

If you get stuck, like trying to understand who your audience is, you can always revert back to the operating plan to determine the primary customer base, the secondary base and so on. Assuming you’ve done the needed research as you put this plan together.

In other words, an operational plan is usually a very long plan that details everything required. From the products, services, the pricing, the sourcing, to the employees, their roles, wages and to the type of expenses you have. And every single possible other detail that will make the business possible.

These plans can also be 50-plus pages and can often take months to put together.

On the other hand, most business people write a business plan in the early stages as they startup their business. These plans that are written are usually put together with the goal of obtaining funding. Be it from a family member, a friend, bank, private investor or a government agency, most will want to see a plan.

This becomes a funding-focused business plan.

With this type of plan, your goal is to explain your funding requirements and pitch your idea and vision to the lenders. The business plan can be, but doesn’t have to be too detailed like an operational plan. Most lenders care about a few things; including your goals, growth strategies, how you will use the money and what return they can expect.

This simplifies the process and is the reason why the majority of business plans now-a-days are funding-focused plans versus operating plans.

The other types of plans, while not as common will include the business sale plans; which are only written if you are selling your business and certain sale requirements may ask for a plan, in which case it will be a plan blended with the operational plan, financial plan and a risk focus.

You can also have one-pager plans which are exactly as they sound like, a one page business plan.
These are generally not ideal, but if you want to get your point across in a quick summary way, like an elevator pitch, the one pager will do that.

With these plans, don’t expect it to get you money from a lender, but use it to get a conversation started.

From there, you have the technical plans. These are often put together for more technical business models, like a financial firm who would have to outline various steps to explain the model; or a medical company that has to outline various research information, medical studies, or similar within the plan.

And lastly, financial plans. Plans that only focus on the financial aspect of a business—the growth, revenue, expenses and so on.

Components of a Business Plan

With most business plans, you want to have the focus of the plan towards the need you have. If that means seeking funding, gear your plan towards that; if it means it’s a sale of the business, aim your plan content towards that.

In most cases, you have to follow a specific guideline of what to include in your plan to make it up to par with what is expected.

1. Executive Summary
2. Your Products/Services
3. Your Audience/The Market
4. Growth Strategy
5. Marketing Plan
6. Funding Needs
7. Your Financials
8. Appendix

These components here will help cover that, no matter the plan you are writing.

The executive summary is generally one page within your business plan and summarizes the key points of the entire plan. This is where you put your focus points that you want readers to see. This part is also done last after you’ve already written your full plan – even though it’s often the first section of the business plan.

You want also to discuss your products and services in detail. What is it that you have to offer, why did you choose these products or services, how will you price it? The more you can explain about your products and services, the better your plan will be, and it will help gear the rest of the content towards a better understanding of your business model.

You also want to do the same with your audience and the market you are in. By the end of the plan, the reader should be fully aware of who your audience is, the various demographics that make up your audience and the market you are in – including the size of it, any competition and so on.

You will also want to spend time planning out your growth strategy and how you plan on succeeding with the business. Be sure to discuss your future and where you see the company and the services you provide up to 3 years down the road.

Think about other things you will offer, other strategies to grow and discuss this in detail.

A growth strategy not only helps you but ensures that a potential investor sees that you are thinking further ahead. Afterall, if you are going to be asking for them to invest in you, you want to show them a future.

Much like a growth strategy, your marketing plan should do the same, and should be a detailed explanation of how you will obtain new clients and attract visitors.

A typical marketing plan is between 1 to 2 pages and explains all of the marketing tactics and initiatives you intend on taking to achieve your goal.

From there, we get into the financial side of things, starting with your funding needs.

If you are seeking funding, this is a crucial section as it will help lenders understand what you need money for. It is often a good idea to break down your funding needs to the specific requirements you have, and show an allocation of how much is needed per each.

If no funding is needed, you may skip this section entirely and focus just on your financial explanation.

In the financials of your plan, your goal is to explain your financial model. Discuss your growth by showing potential revenue figures that you’ve determined based on what you can do. Discuss your expenses , the one time and the on-going ones, and show all that you ca, so that your financial situation is 100% clear.

This is crucial as the financials can help you prepare successfully and sort of know what to expect as you launch.

Lastly, an appendix. This is where you include any evidence, research and anything else you may want the reader to see as they read your plan and try to better understand your business model.

Sounds like a lot. It is however needed for you to succeed.

Access Funding with your Business Plan

One of the main reasons why business owners write a business plan, will be aimed at obtaining funding.

After you’ve invested time to complete a business plan, you will have a clear idea of your potential, the types of expenses you will incur over the startup process, as well, how much you can handle financially speaking on your own – or if you need additional capital.

Your business plan will help you access additional funding as well.

Most banks, private investors and even government funding agencies will always want to see your business plan before deciding to give you any capital.

It makes sense after all – if you haven’t invested the time into developing a business plan, most will assume you wouldn’t invest time into your business. This makes the business plan a crucial component if you are trying to secure funding.

But, not only that, your business plan will also have the needed components that funding agencies or lenders will want to review when determining if they can fund you – or not.

These components will heavily focus on your financial projections, including your balance sheet, cash flow statement or profit and loss statements.

If you are a startup, these projections may be difficult to do, but if you dedicate time to the research and evaluation, you may be in a better position than you think.

Be sure to review the videos in our financial series as well, to determine how to properly project your sales revenue, to determine your expenses and how to seek funding with your financials.

When looking for funding with your business plan, a funding agency or a lender will want to know about the potential earnings your business will have.

So, clearly explaining your strategy as to how you will generate sales should be your number one priority and a key focus in your business plan.

Be it that you explain how you will promote your business to get the sales, or that you will focus on a specific audience, your revenue strategy should be clearly explained.

The same can be done with the expenses. Most agencies and lenders will want to know what you plan on spending your money on in order to achieve that projected revenue. What are your initial costs? What are the long term costs? And what are those on-going costs?

Nobody want to fund a business that is going down quick.

So, be realistic.

Lastly, most funding agencies and lenders want to know what you can’t cover on your own in terms of those expenses – and what you need their support on.

Explaining your funding needs should be a careful, thought-through process that you may need help on. So be sure to work with a funding expert at Canada Startups who can help you determine this, and assist you with approaching these agencies and lenders to secure the needed funding.

What Not To Do

1. Don’t “NOT” write a business plan

2. Don’t “Over-Hype” your business idea

3. Don’t forget your audience, your market, research

4. Don’t include “too much”, or “not enough” information

It is also important to not assume that the reader of your plan understands anything – instead, be sure to explain it and simplify it.

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As we come to the end of the video, I hope you now are more clear on the different types of business plans, their purposes as well as have an overview of the needed components that make up a proper business plan.

Such a large percentage of business startups fail in the first year, and many of the common mistakes that cause this can be avoided with proper business planning.

A properly planned out business can not only help you with being able to explain what you want to do, but it can help you evaluate your business model in such detail that you can see all of the issues that currently exist, allowing you time to fix them before you launch. It can also help you determine where you fall short, especially if related to the lack of capital, so that you can have sufficient time to seek funding before you truly need it and your business is at risk.

Your business plan is one crucial document and should always be considered as the number 1 step to starting a business.

Whatever the case may be, so start a business in Canada, be sure to work with a Canada Startups expert who will help with your business idea, building your business plan and finding the needed funds to make your dream come true – and stay tuned for the next video in the series as we get into the finer details about the business planning process.

If you have found the above video helpful, review the other small business startup videos in the series as we will be discussing various things related to business planning and the required steps. These topics will range from the importance of your business plan, to the various components to include, tips and methods to get a plan in place.