Putting together a comprehensive business plan is an essential part of ensuring the company’s success.
One of the most important items that a business owner in Arizona can create is not the product he or she will sell; it is a business plan. These plans are a vital part of obtaining financing, creating a foundation from which to build the company and outlining goals to keep the business on track.
From small start-ups to large corporations, a business plan should have the following five components:
1. Basic information
Hitting the basics is a must. This would include a summary of what the business does and the goals of the company. Through presenting this clearly and concisely, someone viewing the plan can easily garner information regarding the product or service that is provided, why the business is different from its competitors and who the target audience is.
There are a number of options when it comes to structuring a business – a sole proprietorship, partnership or corporation, just to name a few. Choosing one will have significant legal and tax ramifications. The Arizona Commerce Authority outlines the state’s requirements for launching each entity. For example, starting a sole proprietorship does not mean someone has to file paperwork with the state. However, forming a nonprofit with tax-exempt status will require extra legwork.
Whichever option an owner chooses should be outlined in the business plan. This section should include each person’s role in the company, specifically owners, managers and a board of directors.
3. Market Analysis
Through conducting some research into the target market, a business owner not only learns more about his or her audience, but also determines how the company can better serve that population. The U.S. Small Business Administration suggests choosing a manageable market size instead of simply targeting everyone.
Once the market has been identified, the plan should include the following information about it:
- Industry-relevant information, such as the market’s shopping behaviors
- The needs the market has and how or if those needs are met
- How much of that market the business could capture
The market analysis is also a good place to include how the company’s goods or services will be priced, providing information about competitors as well.
4. Financial information
Having hard numbers in the business formation plan is especially important for people who are seeking funding. If the company is already up and running, this section should include monthly or even yearly budget information, such as balance sheets, income statements and cash flow.
In addition to this historical data, projections for what the company is expected to do over the coming years should be included. People who are requesting a loan should ensure that any projections match those requests, as an inconsistency can turn off a lender.
5. Marketing plan
One final piece to include in the business plan is the marketing: how will the company reach its audience and sell its product or service? This could include how information will be distributed, how the sales team will work and where the product or service will be marketed or sold.
These are just a few of the items that should be in a business plan. Anyone launching a company should consult with an attorney in Arizona.
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