10 Questions Your Business Plan Must Answer

Your business plan serves a simple but important purpose — to detail how you plan to handle various aspects of guiding a business to success. When interested parties, such as immigration officers, investors and other potential stakeholders, read a business plan, they’re usually looking for specific answers to questions they would ask of any new business. It’s important to have that information ready and easy to understand. 

Here are ten key questions your business plan must answer. 

1 – What is your business idea?

The basics are important but so is precision. Clearly define what your business will do, complete with products and/or services you want to offer. If the business is meant to appeal to a certain kind of customer or a certain demographic or taste or style, be sure to include it. 

Most types of businesses will be familiar to anyone reading a business plan but sometimes the new idea involves something truly unique or difficult to understand. Break things down into simple parts that make the concept easier to understand. 

2 – Who are your customers? 

It’s important to demonstrate that you understand who your target market is. Who exactly are they and why will they want to buy anything from you? 

Answer this with demographic information, financial analysis and other metrics that show that what you plan to offer is an exact match for an under-served or ignored segment of the market. 

3 – What’s your value proposition? 

In other words, why will anyone want to buy from you in particular? This is your chance to explain what will make you unique and why customers will choose you over competitors.

Think of the value proposition as your “angle” in the marketplace. Some brands, for example, want to be known as the cheapest or the most reliable or the highest quality or fastest or most prestigious, etc. What do you want to be associated with in the minds of customers? 

4 – Who are your competitors? 

An accurate, honest and complete understanding of the competitive landscape is key to any business plan. Show that you are aware of all competitors on the market, their market positions, value proposition and reputation among customers. 

Use your business plan to explain how you plan to differentiate your business from others based on the weaknesses or vulnerabilities of competitors. 

5 – How will you market and sell your product or service? 

You don’t need every detail yet, but a broad outline of your sales and marketing strategy needs to take shape in your business plan. This includes advertising, promotions, sales channels, and pricing strategies.

B2C and B2B operations will have different approaches but the important part here is to show the touchpoints where customers will be exposed to your brand and message and how purchases will be executed. 

6 – What is your cost structure? 

Where is your money going to go? This is where you can answer by detailing all your operating costs, including production, cost of goods, rent, marketing, labor and other overhead expenses.

Remember to make a distinction between fixed and variable costs as well as direct and indirect costs. 

7 – What are the main risks and challenges?

This goes beyond the previously-mentioned competitive landscape to other potential threats that could affect your chances for success. This could include the larger economic situation in your surroundings, a downturn in the industry you serve, being dependent on a small number of clients, losing access to supply or anything else that could cause extreme difficulties in the business. 

Think about what factors your business idea depends on and what happens if those factors change to your disadvantage. Investors and other stakeholders want to know what your plan is in certain “What if” scenarios. 

8 – Who will guide the business through the early stages? 

The expertise and experience of your management team is something potential investors will want to know about. Use your business plan to highlight where their skills and knowledge align with the needs and demands of the new venture. 

This is especially important for businesses that will depend on some degree of specialized expertise, usually technical in nature. Your business plan should make it clear that the team you have assembled is capable of handling the issues that are central to the success of the business. 

9 – What are your financial projections for the first five years?  

Let’s talk about numbers because any potential investors in your business will certainly want to. Your business plan needs to include revenue and profit & loss statements for the first five years of the business’ operation. This will obviously involve some guesswork and projections but the point is to show that you have a realistic understanding of the early stages of your business. 

“Realistic” is the important word here. No one can see into the future and so your numbers are educated estimates at best, but investors want to see numbers that are actually based on something, like current industry baselines or other credible metrics. Using inflated, overly-optimistic numbers doesn’t suddenly make your business idea more attractive. Instead it creates doubt about your ability to make reasonable, fair estimates about financial realities. Being honest and accurate is always better than using numbers that are simply unattainable. 

10 – How will any investment you secure be used? 

If the purpose of your business plan is to attract investment, you need to specify how much investment you’re looking for based on the needs of the business. 

This will have some relationship with the financial performance of the business outlined in the previous point, as any investment will have to support the business until it becomes self-financing. 

Investors also want to know how any funds will be spent. This will be informed by the cost structure of the business mentioned above. Are most of your resources going to capital investments? Salaries? Inventory? Detailing where the money will go will help you be sure that your estimates are reasonable and demonstrate that you have a thorough understanding of where investor money will be spent. 

Need help with a business plan?

Our team at Joorney has prepared nearly 30,000 professional business plans for ventures in more than 180 different fields and industries. We have the knowledge and experience to craft a comprehensive business plan that makes a compelling case for your professional ambitions. 

Reach out to us today or fill out the short form below to learn more about how Joorney can provide the business plan you need to move your plans forward.