In my article: 12 Reasons Why You Need a Business Plan, I said that a business plan is the road map for your business. It is the foundation of any successful business. In this article, I have explained the various components of a business plan and how to write an effective business plan that will help you to achieve your entrepreneurial objectives. This article will also guide you step-by-step on how you can write the type of business plan that would convince financial institutions to grant your request for a business loan.

There are several formats for writing a business plan, but the principles are the same. Whatever the format, the major sections of a business plan are as follows:

1. The Executive Summary

In this section you need to describe what your business is all about, why you believe in the business and why you think it would work. The executive summary is usually the first section readers of your business plan will look at because it summaries all other sections of the business plan – like the business overview/description, company profile, market analysis, your products/services, and your financial plan. Therefore, it is advised that the executive summary should be written last after you have written other sections of the business plan because you would have done the details already.

2. Company / Business Description

Here you give information about your company. Summarize what your business is into, its vision and mission statement and the company/ organizational structure. It should more importantly state the industry that your company belong, the overview of your company’s parent industry and your company’s potential role in the industry and how your new business will affect the industry.





3. Market Analysis

You should be able to state your target market for your product and why they will be buying your product, including the estimated percentage of the market share your product is expected to reach. Give a background information about the demographics and geographic location of your target market and their needs. Your target market should not be vague, but specific. Your market analysis should be based on both the market survey you have done on your own and by the surveys that other persons have done previously.

Your market analysis section should also include your findings about your competitors and your comparative advantage over your competitors. Your market analysis is very important because the result will give an idea on whether or not your business will be a success. It should contain an analysis of your business’ Strength, Weakness, Opportunities and Threats (also known as SWOT analysis).



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4. Product and / or service

What are your products and /or services? How will your products benefit your target market? What problems do your products / services seek to solve? What other companies are offering similar or same products and why should the consumers buy you own products instead of that of your competitors? What uniqueness does your products and services bring to the table? All these questions should be addressed in the product section of your business plan.

There are more steps to writing a business plan easily, you can SEE THEM HERE.