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The Executive Summary: Your Business Plan’s Core Component

The executive summary is one of the most important parts of your whole business plan because it should demonstrate your entire plan in miniature. In short, the executive summary is really a quick summation of your whole plan, which is why it obviously isn’t the easiest component of your plan to write! However, if you want to draft a sound business plan, your best bet is to first write the executive summary because it will set the course for the remainder of the plan. Here is how you can write an executive summary worthy of a great business plan.

Crystallize All of Your Thoughts

The first step to writing an effective executive summary is to crystallize your thoughts. The executive summary is meant to feature all of your plan’s key points and highlights. Therefore, to write a summary, you’ve got to concentrate on the factors and issues that are most relevant to your business. This applies to both its past and future. It will also do you good to ignore all of the tangential issues that your business faces.

Determine Your Priorities

A good business plan will be itemized according to the order of importance of the various elements. Since your executive summary is a microcosm of your whole plan, the summary must also follow this type of organizational format. By writing your summary, you have to prioritize since you’re forced to select and choose from the different points you wish to make in the business plan. You’ll also have to determine their order of importance.

Come up With the Plan’s Full Foundation

Even if you’ve just completed your first draft of the summary, your task of writing the entire business plan now becomes so much easier! Now, you’ve bestowed yourself with a specific takeoff point for every part of your plan. The few sentences that sum up the way to create a specific product or provide a certain service give you the foundation for that part of the plan.

The executive summary is the core component of your business plan, and now you know why. When you’re drafting your summary, just keep the above tips in mind. Gather all your thoughts and organize them well. Then, order your priorities so that you have a clear path going forward. Finally, establish the full foundation of your whole business plan to tie things together. Follow these simple steps, and you will have a stunning executive summary and, by extension, a highly effective business plan.

Peter

Using Your Business Plan Internally

A business plan can also be used internally by your company. It isn’t meant to just be used to attract funders, while that is, of course, its primary purpose. If you’re particularly savvy, you can tailor your plan so that you can use it internally to assist you in moving forward with success and confidence. This is a particularly helpful tactic because you can use this internal analysis on a regular basis to see if you’re satisfying your expectations. If you see that you’re falling short of these expectations, you can always revise them to make everything come together more seamlessly.

Monthly Revisions

Never fall into the trap that the majority of people who write a business plan end up falling into: Thinking that it’s only a one-time plan that you then blindly follow over the life of your business. Nothing could be further from the truth. Instead, you must revisit your plan once every month. Call a meeting, and see if your assumptions, which you composed when you initially wrote the plan, have panned out. If they have, great! If not, it’s time to retool.

Go Into the Specifics

Another mistake is that too many people believe a business plan is just for devising strategy, but this is false. Specifics are just as vital. Specifics that ought to be covered in any half-decent plan include who in your company’s accountable for what, when it occurs, the cost of your products and services, and the profits your business is expected to bring in. After all, your plan’s about what’s going to happen, so infuse your plan with metrics you can reevaluate later on.

Cash Flow Projections Are Necessary

Never neglect your cash flow projections. A business dies without cash, but lives and thrives with a healthy amount of it. While profits are not just nice (they’re necessary!), you spend your cash…not the profits! A profitable company can go bankrupt if it fails to have enough spending money. Therefore, you should analyze how your cash flow is affected by your inventory, which can work out to you paying for stuff you purchase way before you’re actually paid for what you sell.

This is how you can use your business plan internally. Notice how there are practical reasons to do so. If you utilize your plan internally as well, you get to see whether you’re on track to satisfy your earlier assumptions and projections. Using your plan internally also lets you correct your course if things are not working the way they should be.

Peter

The Components of a Killer Business Plan

All business plans that are effective and that will draw financial backers to your idea will share the following components. Some people who write a business plan don’t understand how to properly do so, which leads them to omitting absolutely integral parts that don’t reflect very well on their understanding of a plan. Long story short: If your business plan fails to include these basic components, you’re telling your prospective funders that you haven’t even put together a smart business plan. Here are the components that should be in your plan. You can rearrange the order of said components if you like.

Executive Summary

Your plan’s abstract, the executive summary is a preview of everything that you’re going to cover in more intimate detail in the coming pages. It will spell out both the content and the objectives of your plan, covering the important parts.

Business Offering

This is the part to discuss why you’re in the business you’re in and just what you’re selling. If you’re selling products, explain whether or not you’re the manufacturer or the distributor. If you’re selling services, go into details about said services.

Company Overview

The overview offers additional information about your company. You should explain why you went into business, its model, its objectives and any strategic partnerships that you may have established.

Strategy and Implementation

Include the dates and deadlines of significant objectives in this part of your business plan. Here is where your potential funders will be searching for stuff to actively track. This section’s also great for mentioning your sales forecasts.

Management Team

Here is where you have to fill out the profiles of your executives and your managers. This is particularly applicable if you’re writing your business plan with either bankers or investors in mind as the target audience.

Marketing Plan/Analysis

This part is dedicated to your marketing tactic, where you highlight aspects of your customer service, sales, marketing, market analysis and public relations efforts. You should also include a summary of why you have confidence in the success of your new company.

Financial Projections

Here’s where you jot down the so-called quantitative interpretation of each fact you put down in your marketing and organizational parts of the plan. Finally, this should be the last section of your business plan.

These are the vital components of any good business plan. This is what your funders will be searching for when they read through your pages. Don’t disappoint them and sink your chances of receiving funding by omitting even one of these integral sections. If you include all these sections, your business plan will truly be killer.

Peter

3 of the Worst Business Plan Mistakes You Can Make

A business plan is the blueprint of your new company. It tells funders how you’ll raise money, what your strategy will be to make your business grow, and how you see your chances against the competition. As you write your business plan, you want to make it the very best that it can be by avoiding lots of mistakes that could end up sinking your plan for good. When you present your plan, you only have one shot to make it count. Here are 3 of the worst business plan mistakes you can make.

Inflating Your Market

Inflating the market is one of the worst business plan mistakes because you’ll be seen as unrealistic. At worst, you may even be seen as attempting to deceive your potential funders with excessively rosy predictions. As you refer to your total market value in your plan, you have to be realistic as well as skeptical. It’s also a good idea to make assumptions to reduce any big market numbers down to size.

==> Download your business plan template now!

Excessive Focus on the Big Picture

A business plan frequently is preoccupied with just global strategies, demonstrating only the big picture. This can be a bad mistake to make since a plan must also deal with the so-called economics of the single unit. This is a reference to the process from production to channels to, finally, the end user. You must demonstrate what you obtain, what it costs you and what the purchaser will pay. Remember: Too much big picture focus is bad.

Being Unrealistic About Selling Channels

A huge plan mistake is failing to comprehend how your retail channels operate. The worst presumption is that the retailers have a desire to purchase your product right from you. Much of the time, they instead have a bias in favor of going through the distributors. If your aim is to sell through any channels and then take home greater than 50 percent of what your end consumer pays, you’re not familiar at all with your channels.

These are 3 of the worst business plan mistakes that you could make. Whatever you do when coming up with your plan, avoid these aforementioned ones at all costs. They will sink your business plan like a stone, and you can kiss your business dreams goodbye. Remember that your potential funders are seasoned investors, so they know how to tell apart a good plan from a failing one!

==> Download your business plan template now!

Peter

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