Five Elements for an Effective 2021 Business Plan

December 22, 2020 at 11:00 AM / by Ibhaze Uduehi  /  6 minute read

Business Plan

Are you an Advisor, running an MGA, or an entrepreneur who is starting your practice? If so, this blog will guide your thought process through developing an effective business plan. Keep in mind that if you operate a lean team, some elements may not be applicable. If that is the case, read through the guide and just apply the elements that work for your planning process.

A business plan is the blueprint of your business, serving as a reference point and guide to the year ahead. When followed through with some flexibility for unpredictable variables, your plan will illustrate the position of your business with a clear, step-by-step path toward its end goal.

Below are five key areas that your business plan needs to guarantee success. Before diving into the ingredients of a solid plan, remember to keep it concise so that it is easy for your audience; investors or staff members; to digest and quickly understand the plan.

EXECUTIVE SUMMARY

Description

This is the hook that you will use to reel in your audience by making them more interested in the rest of your plan. While an executive summary is always at the beginning of your plan, it is easier to write this section last—once your full plan has been fleshed out. That way, it is easier to summarize the key points already laid out in your report in an appealing manner. The following should be included in your summary:

Key Components

  • Your problem: That which you intend to solve in the market.
  • Your solution / competitive advantage: An overview of your product/service and how it will resolve the problem mentioned above.  
  • Market data: Provide a synopsis of the market your product will play in by including facts, such as key players, dynamics, segmentation, drivers behind the segment's development, growth potential within the market and segment, and other necessary information.
  • Target market: Who exactly stands to benefit from your solution? Be specific. It can't be everyone.
  • Team outline and previous achievements: Briefly introduce your team while explaining what makes you able to fulfill the purpose of the business. Be sure to include past accomplishments within similar markets.  
  • Financial summary: List out your revenue and expense projections for the next three years with a clear outline of how much value will be achieved at every phase of the plan. 

BUSINESS OVERVIEW

Description

Use this section to provide an in-depth view of the business structure you have in place, detailing how it functions seamlessly toward achieving your defined goals. Explain your offerings, which market your business operates in, your competitive edge in that market, and who will benefit the most from your solutions. Ensure that these feature in your business overview:

Key Components

  • The evolution of your business from concept to reality. Your business structure from awareness to completion of sale, i.e., the consumer lifecycle in relation to your business (offerings, channels, distribution process, advertising, customer service, etc.)
  • Highlights about your team across levels with some detail on departmental or individual responsibilities, depending on your company size.
  • Specifics about your business, what it has to offer, and how it fits into the current competitive landscape.
  • Details about your products/services, including what sets them apart from other industry players, and a clear statement of how your offering improves your target audience's life.
  • Your mission statement explains your organization's purpose, overall goal, product/services within the context of your industry, and customers’ needs.

MARKET ANALYSIS AND STRATEGY

Description

Show the depth of your knowledge and understanding of the market space by outlining the following:

Key Components

  • Define your market using comprehensive information containing insightful data on competition and key players, market share, the current outlook, and future opportunities for your industry.
  • Conduct a thorough SWOT analysis—where do your strengths and weaknesses lie? What opportunities and threats exist that could potentially direct the growth of your business?
  • Formulate a clear value proposition statement that illustrates, in simple terms, how your offering differentiates itself from the competition and what role it plays in the life of your target audience. This statement will grant you an understanding of how both customers and competition will position your business.
  • Outline the promotional tactics you'll use to publicize your business with a measurement of cost against expected sales or intangible values, such as brand awareness and reinforced brand perception. 

EXECUTION

Description

An execution plan lays out the logical series of actions required to implement your strategy and make your business work. Keep three things in mind when outlining this section: your goals, the steps toward achieving them, and the cost each activity will incur. This section can be broken into three broad categories:

Key Components

  • Operations: What do you need to make your business legal/an entity? How will your business function? What sort of technology will you need to operate? Will you require skills that you do not possess? Do you need to partner with vendors to facilitate your processes? What tools do you need to perform your tasks?
  • Pricing: An overview of logistics, including your brand positioning and other industry variables, will inform your pricing strategy.
  • Marketing and sales: What's your overall strategy? How do marketing and sales strategies feed into your business goals? Who is your target audience, and how do you intend to connect with them? How do you plan to measure the success of your advertising initiatives? 

FINANCIAL PROJECTIONS

Description

Financial projections are arguably the most crucial aspect of your business plan and should have the following components:

Key Components

  • Sales Forecast: This could be difficult to put together if you're a startup with no historical data. However, having figured out your market and associated trends, you could quickly develop a 12-month plan using the data fed into other sections of your business plan.
  • Cash Flow Statement: Simply put, this statement shows the monthly flow of cash into and out of your business.
  • Profit and Loss Statement: This contains a list of all the ongoing expenses involved in the operation of your business, resulting in the bottom line where your costs are deducted from income to show whether your business will make a profit within the duration of your plan.
  • Balance Sheet: An overview of the health of your business with a breakdown of all your assets, liabilities, and equity. The balance is determined by subtracting your liabilities from your assets and providing you with your company's net worth.

Plugging in all the information listed above should enable you to produce a workable 2021 business plan that serves you now while remaining open to include actual data of your business as it evolves amid indeterminate factors.

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Topics: Life Insurance Business as Usual

Ibhaze Uduehi

Written by Ibhaze Uduehi

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