Retail is a competitive industry, even more so now that many businesses are investing more in ecommerce and digital marketing.
To have any realistic hope of getting noticed in such a crowded industry, your business needs a solid plan for success.
Regardless if you’ve been operating for a long time already, by drawing up a simple business plan outline, you can get the overview you need to make smarter decisions about where your company is headed.
In this article, we’ll give you all the key components of a business plan and show you why your company needs one today.
Why every retailer needs a business plan
A well-thought-out retail business plan can offer great leverage when you approach banks for a capital loan. It could truly change the fortunes of your company’s future.
Studies show that having a business plan doubles your chances of securing a loan, and 64% of companies that have a plan go on to grow their business.
But how important is a business plan if you aren’t attempting to get a loan from the bank?
Here are a few great reasons why you need a business plan outline at the very least, if not a fully-fledged plan:
1. Test out how feasible your business idea is
By thinking ahead and taking the time to plan, you can save yourself a lot of money and time in the long run. Many ideas are discarded during the planning phase, which frees you up to focus on better ideas.
2. Boost the chances of success
When you create a business plan, you’ll pay close attention to financial matters, operational goals, and marketing strategy.
Putting your head into this helps you develop foresight to deal with potential issues down the road. This paves the way for a smooth launch, ensuring your start-up doesn’t crash right out of the gate.
3. Enhance your management of the business
Due to the dynamic nature of businesses, your company is likely to evolve and grow over time, which can prove challenging if you have no guide to adhere to.
A well-maintained business plan can keep you on track to your goals and help in the decision-making process about which directions to take the company.
4. Attract investors and new business partners
The bank isn’t the only option for getting financial backing. Angel investors or venture capitalists are great sources that could help you get your business off the ground, but they will definitely want to see some solid projections and strategy for the company’s future.
At the very least, you’ll need a solid business plan outline that convinces them your idea is a worthwhile investment.
7 key components of a business plan
Having a comprehensive retail business plan will let people know how serious you are. Not only could it help you get more financial backing, but it will prove to be a useful roadmap as your business grows.
The structure of a basic business plan outline can vary, but the best business plans typically include the following elements:
1. Executive Summary
This is your elevator pitch. It puts the big takeaways in a nutshell, providing people with quick insights on all key components of your business plan.
You may find it easier to write the executive summary in the end when you finished the rest of the business plan.
In many cases, the full plan won’t be read unless the executive summary is really compelling. Consider including a strong hook or a pitch deck that captivates people, effectively getting your foot in the door.
Here’s a hypothetical example:
Organic clothing line, U & I focuses on fashion that is socially conscious and environmentally responsible, which is a thriving movement that resonates with a lot of people nowadays.
2. Business Description
In this section, delve into your company’s background, from the origin story to your mission statement. This is an opportunity for brand storytelling, which may help potential investors forge emotional connections with your business and its ideals.
Also, it can be a strong motivator for you to refer back to in tough times when you feel yourself plagued with doubts or conflicts about where your business is going.
When creating this component of the plan, think about the following:
- What is your business model?
- Who is your audience and how are you trying to serve them?
- Where is your business located?
- Identify potential market opportunities.
- Consider any unique business relationships you can use to your advantage.
- What is the current legal structure of the company?
- What is the projected growth of your business?
Ann’s Office Hut uses this section to highlight how they can fill the needs of small business owners in Boston. By answering key questions like the ones above, you narrow your focus to show potential investors and lenders the strength and clarity of your vision.
3. Market Analysis
While the retail industry is crowded, there is still plenty of space for newcomers in certain niches. Finding your place in the market is critical for lasting success, and that’s why market analysis is one of the key components of a business plan.
In this section, you must analyze your competition, look for opportunities to be better than them, and also include buyer personas for your target audience.
You can support this market analysis by studying industry trends and focusing on specific locations that you will be targeting.
By drilling down with marketing segmentation, you can define your target market and the need for your business. As a result, your business plan outline will be much stronger in the eyes of banks and investors.
Java Culture implemented this strategy when they decided to open a coffee shop near the University of Oregon to target the student market.
4. Organization and Management
No business plan is complete without an in-depth look at the team behind your ideas. By showing you are more than one man with an idea, you add real weight to your ambitions.
In addition to waxing lyrical about financial projections and marketing mumbo-jumbo in your business plan, outline the experience and expertise of each team member that will help you reach your projected goals.
Tasteful Inc. have done a good job of this by including an engaging photo and extensive details of their team member’s background. This can make a big difference to your pitch, as a venture capitalist may be persuaded to take a punt with a new start-up purely based on the credentials of the team members.
5. Sales Strategies
You can’t sell anything if you don’t have an audience. It won’t matter how good your products are if your marketing strategy isn’t on-point.
In your business plan, you need to explore the current strategies being used, as well as any others you plan to implement in the near future. From email marketing to social media, video content to press releases, consider any and all avenues of how you will build greater brand awareness.
Salesforce placed a huge emphasis on internal training and upskilling their staff, which helped them skyrocket to a $50 billion valuation.
6. Financial Projections
The penultimate section in your retail business plan is for your financial projections. Looking forward, there are several key aspects in the financial section, including:
- Revenue growth
- Expenses budget
- Cash-flow statement
- Income projections
- Breakeven analysis
- Sales strategy
- Pricing model
Web Solution Inc. have included many of these in their financial forecast. To come up with realistic numbers, you need to take the time to work out a timeline for the various steps on the road to becoming a sustainable, profitable business.
Banks or investors will want to know when they are likely to see a return on their investment, and so it’s crucial that you provide accurate financial forecasts in your business plan outline. It’s a good idea to include detailed information for both the best-case and worst-case scenarios.
7. Funding Requirements
All the key components of a business plan you decide to use in your proposal will be leading up to this point – the big ask.
Although it may not be possible to pinpoint an exact number, you should have a good idea of what you need. With your financial projections in mind, it should be possible to hone in on realistic figures, which are fully justified by your business plan outline.
When the founders of Craft Club made their pitch on Dragon’s Den, they knew exactly what they needed. They requested £75,000 for a 12.5% equity stake in their company – a subscription service for gin and wine deliveries.
They secured a valuable partnership and have since gone on to huge success.
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A business plan outline is better than nothing at all
It takes a considerable amount of time and resources to create an in-depth business plan that considers all the key aspects discussed in this article.
In the long-term, the benefits of having a strong business plan are immeasurable, but in the short-term, having a basic outline is better than nothing at all.
By creating a simple structure that considers the fundamentals of your company, your products, the market and your budget, you can soon get a good picture of the feasibility of your business idea.
Doing this sooner rather than later can save you and your team a lot of wasted time and money. Once you develop the business plan outline into something more concrete, your company will be a more organized, viable venture in the eyes of banks and investors.
About Francesca Nicasio
Francesca Nicasio is Vend's Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.