What is an organizational business plan?

A formal and well-thought-out document containing business goals, the methods on how these goals can be attained, and the timeframe for achieving them. It also describes the nature of the business, background information of the organization, marketing plans, the organization's financial projections, and the strategies it intends to implement to achieve the stated targets. In its entirety, this document serves as a roadmap that provides direction to the business and can be used to obtain financing.

The business plan generally projects for a period of 3 - 5 years ahead and outlines the route a business intends to take to reach its yearly milestones, including revenue projections. A well drafted plan also helps to step-back and think objectively about the important elements of the business venture and support the decision-making process in a structured manner and review plans on a regular basis.

The effort and measures taken to ensure that the business plan is thorough, accurate and up to-date is an investment that would benefit the business in the long-term.

Ideally, every business plan should include the following sections: Executive summary, details regarding the organization and administration, market analysis, marketing and sales management, information on the service or product line, financial data and projections.

Contents of a business plan

Cover page

A cover listing that includes the name of the business idea, the name of the organization, address, phone number, e-mail and website addresses, and the date. You don't have to spend a lot of money on fancy designing. Readers want a plan that looks professional and well compiled, and is easy to read.

If you have an organization or business logo, you can use that too. A table of contents follows the cover page, so that readers can quickly find the information or financial data they need.

Executive summary

The executive summary, or statement of purpose, encapsulates your reason for writing the business plan. It presents, in an abridged way, the gist of the business plan. It tells the reader what you want and why, right up front. The questions that pertain to your situation should be addressed here clearly. The summary or statement in this case should be no more than half a page in length.

Description of the business model 

When describing your business, say which sector it falls into (wholesale, retail, food service, manufacturing, hospitality and so on), and whether the business is new or established. Continue with information on who the business' customers are, how big the market is, and how the product or service is distributed and marketed. Explain your business operation in a nutshell here.

Market analysis/research

This is an important component of your business plan and therefore extra attention to be given to this section.

A thorough market analysis will help you define your prospects as well as help you establish pricing, distribution, and promotional strategies that will allow your company to be successful vis-à-vis your competition, both in the short and long term.

Begin your market analysis by defining the market in terms of size, demographics, structure, growth prospects, trends, and sales potential. Next, determine how often your product or service will be purchased by your target market. Then figure out the potential annual purchase. Then figure out what percentage of this total market share you either have or can capture. Keep in mind that virtually no one gets 100 percent market share, and that something as small as 25 percent can be considered a dominant share. Your market share will be a benchmark that tells you how well you'te doing in light of your market-planning projections.

You'll also have to describe your positioning strategy. How you differentiate your product or service from that of your competitors and then determine which market niche to fill is called ‘positioning’. Positioning helps establish your product or service's identity within the eyes and minds of the purchaser.

A positioning statement for a business plan needs to point out who your target market is, how you'll reach them, what they'te really buying from you, who your competitors are, and what is your unique selling proposition (USP).

How you price your product or service is perhaps your most important marketing decision. Many methods of establishing prices are available to you, but the below are among the most common.

• Cost-plus pricing is used mainly by manufacturers to assure that all costs, both fixed and variable, are covered and the desired profit percentage is attained.
• Demand pricing is used by companies that sell their products through a variety of sources at differing prices based on demand.
• Competitive pricing is used by companies that are entering a market where there's already an established price and it's difficult to differentiate one product from another.
• Markup pricing is used mainly by retailers and is calculated by adding your desired profit to the cost of the product.

You'll also have to determine distribution, which includes the entire process of moving the product from the factory to the end user. Make sure to analyze your competitors' distribution channels before deciding whether to use the same type of channel or an alternative that may provide you with a strategic advantage.

Finally, your promotion strategy should include all the ways you communicate with your markets to make them aware of your products or services. To be successful, your promotion strategy should address advertising, packaging, public relations, sales promotions and personal sales.

Competitor analysis

The purpose of this analysis is to determine:

• The strengths and weaknesses of the competitors within your market.
• Strategies that will provide you with a distinct advantage.
• Barriers that can be developed to prevent competition from entering your market.
• Any weaknesses that can be exploited in the product development cycle.

The first step in a competitor analysis is to identify both direct (any company that offers the same thing as you) and indirect (refers to a business whose products or services are different from yours, but potentially could satisfy the same need and reach the same goal) competition for your business, both now and in the future. Once you've grouped your competitors, start analyzing their marketing strategies and identifying their vulnerable areas by examining their strengths and weaknesses. This will help you determine your distinct competitive advantage.

Financial components of your business plan

After defining the product/service, market and marketing operations, the next area to turn your attention to are the financial statements that form the backbone of your business plan: the income statement, cash flow statement, and balance sheet.

Income statement

Analyses your business model’s ability to generate a net profit, or your bottom line. This is also known as a profit and loss projection income statement.

Cash flow statement

Displays the operating, investing, and financing activities of your business model by detailing the money coming into and going out of your business.

Projected balance sheet

Estimates resources your business model will need, where they will be needed, and how they will be financed.

Breakeven analysis

Shows when your business model will be able to cover all of its expenses and begin making a profit.

Benefits of a good business plan

Below are some of the fundamental reasons to have a standard business plan.

• It helps obtain financing for projects, simplifies decision-making processes, allows an entrepreneur to meet goals, and helps improve the business. This makes success more likely.
• It assists a lender in deciding whether to invest in a business or idea and provides an organizational framework for the entrepreneur to decide whether to proceed with a business. It helps the entrepreneur stay on track and meet goals, and allows for business improvements.
• If your cash flow is running lower than projected at the moment, even though you're not currently in trouble, that information in the business plan may help you to spot a potential business disaster before it occurs. By comparing plan projections with actual results, you gain a deeper understanding of your business’s pressure points or the components of your operation that have the most effect on results.

Who would be interested to read/review a business plan?

Whoever reads or reviews your business plan should be able to understand easily who your target market is, what your market niche is, exactly how you'll stand apart from your competitors, and why you'll be successful doing so.

The following stakeholders may be interested in your business plan:

• Potential investors
• Funding agents
• Top management and board members
• Internal employees who are connected to the business activities
• Your reporting lines

Objectives of this online business plan tool

• To provide an online solution and consistent template/format for the development of a business plan.
• To help generate a unique business plan for the organization to follow in their business execution and tactical follow-up.
• To automate the business planning process of your organization.
• To strengthen the ongoing efforts of the SE Hub to provide capacity building tools and support.
• To provide a social enterprise/business guide for organizations through the business plan which will help at the various stages of the business.
• e.g. To make decisions, such as when to hire additional personnel, whether to expand to multiple locations or whether to diversify product or service offerings.

What online support does the Social Enterprise Hub offer to develop a good plan?

You can visit www.seippf.org, the Social Enterprise Academy website, and access the business learning modules to gain further knowledge on the components of the business plan.

Particularly, you can refer to the following learning modules:

• How to market your product or services?
• How to sell a product or service?
• Introduction to business budgeting and finance

What are the benefits of this tool vs hiring a consultant or doing it yourself?

• It is easy to use, well-structured, and comprehensive.
• It has a logical flow which helps organize the content.
• Professional analysis and a ready to share document as a final output.
• This tool is free to use. It can relatively save money and time as you work to get your business off the ground.
• It can help you build confidence and organize your finances to give your business that extra boost.
• Finally, and perhaps most importantly, it comes with support from the SE Hub: wealth of expertise, the best of FPASL which is an IPPF leader in social enterprise.

Hiring a consultant company or individual to write up your business plan could take a bit off your plate, but it comes at a high cost. Consultants without the inside knowledge of the organization can struggle to understand your vision, mission and passion and tailor the responses to make them relevant. Finally, you may lose several hours reviewing and editing, perhaps even rewriting, the business plan. All said, if you are still unsure and have the resources to do so – you can hire a consultant and request them to use this tool so as to follow the SE Hub recommended standard format and benefit from the Hub’s feedback.

You could also write the business plan yourself without using this tool and on a different template, but if you’re new to the business start-up scene, it may be difficult to organize your thoughts and plans, which could subsequently cost you time and effort.

Do read our FAQs and Glossary sections for clarifications on other questions and for an understanding of the business terms/phrases used in this tool.