Business Plan English: 20 Key Terms You’ve Got to Know
Are you starting a business?
Or are you planning to expand your existing business?
Then you are probably thinking a lot about dollar signs.
That’s right. To start or expand a business, you need a source of money or financing, as it is called in business.
How do you convince investors and banks to finance your business?
The answer: You need a business plan.
First, you need to write a business plan to impress your potential (possible) investors and lenders.
This business plan needs to convince them that financing (giving money to) your business is a really good idea.
A business plan is like a map. It shows the directions to reach the future of your business. It describes what your company will do and how it plans to succeed and be profitable (make money). After all, business is about making profit, is it not?
How to Prepare and Polish Your Business Plan
Writing a business plan sounds easy, but it takes thought and planning. Writing a truly impressive plan takes time and lots of writing. Do not be surprised if writing your plan requires lots of editing and rewriting, too.
In fact, it is common practice to hire a professional editor to proofread and strengthen your writing. A business plan is a very important document, and you will need your writing to be perfect and polished.
When your business plan is completely written and ready for editing, we highly recommend that you contact Proofreading Services. This is an online team of professional editors with tons of knowledge and experience, offering combined proofreading and editing for over 5,000 clients in 93 countries. They offer an exclusive discount to FluentU readers, and all you need is our secret password: FLUENTU15. This code entitles you to 15% off at ProofreadingServices.com!
If you’re still preparing to write your business plan, you should do some research to get started. There are many styles and formats of business plans on the Internet. Here are some examples. Select one that suits the way you would like to present your information and ideas.
When you are ready to write, you can also follow a step-by-step guide to writing a business plan that includes all the key components, like this simple Forbes guide, or this one from the U.S. Small Business Administration.
The 20 Crucial Parts of an Impressive Business Plan Written in English
For our purposes here today, I will be introducing and discussing all the most basic elements of a traditional business plan. If you choose to write one with a different style and format, you will need to adjust your writing a little.
However, each main word or phrase on this list is very important to know, whether you are planning to write your own amazing business plan or just learn more about these plans in general.
So, let’s get started!
1. Business Vision
Business vision refers to the direction you want to see your business grow in the long term. Answer these questions in your business plan:
- What kind of business do you want to have in the future?
- What are the goals of this business?
- What will success look like?
You will need to write a statement about your business vision in any business plan.
2. Action Plan
To support your business vision, you must have a powerful action plan. You will need to write a great description of your action plan within your business plan.
This action plan will show all the steps your business will take in order to achieve its main goals and become profitable.
3. Management Team
You will want to get your management team involved if possible.
Who is part of your management team? Your managers, senior staff and/or board of directors are the people with the ideas and experience to contribute to your business plan.
You will also need to include a strong section about your management team in your business plan, so that investors know who is guiding your business.
4. Executive Summary
The executive summary is a comprehensive (complete) explanation of what your company does and what places it in a unique position to succeed.
The executive summary must be the topmost section of the business plan, so it is the first thing your potential investors will see. It is usually about one or two pages long. Reading these first pages will help investors decide if they want to continue reading and seriously consider investing in your business. So you want to be sure that this section is written to catch their attention and get them interested in financing your business.
An interesting point I’d like to make here is that, although the executive summary is in the first section of a business plan, it is best to write it last, after the rest of the sections have been written. This is simply because the executive summary is, in effect, the summary of all the other sections.
5. Target Market
A target is something you aim for. Your target market will include the people to whom you are aiming to sell things.
For instance, according to Business Insider, Nike is focused on three target markets: women, young athletes and runners.
6. Market Analysis
A market analysis is basically a study of how you plan to market (sell, advertise) your products and services to your target market.
7. Market Share
In your business plan’s market analysis, be sure to discuss how big of a market share you expect to gain.
Market share refers to the portion of the market your company controls. For instance, according to Statista, Coca-Cola held a market share of 48.6% in the soft drink market in 2015.
8. Competitive Advantage
In your market analysis section, you also need to talk about your competitive advantage. This refers to the advantages your products or services have over those offered by competitors.
Some questions you might ask yourself here would be:
- What makes my product better, stronger or healthier than Product X?
- Why would a customer choose my product over Product Y?
9. Sales and Marketing Strategy
Think of this strategy as a master plan, a plan which combines all of your best, brightest and most important ideas and shows how success will be achieved.
So then, a sales and marketing strategy combines all of your sales and marketing goals and market research into a master plan that will bring in maximum profit.
Your sales and marketing strategy needs to be fairly detailed. You should include information about products, pricing, branding, competitors and distribution channels.
10. Distribution Channels
This refers to the path a product takes through middlemen or other distributing companies before it reaches the consumer.
11. Sales Forecast
How well will your product sell? How much money do you expect to make from this product? Your investors will be interested to know this.
It is important to include a sales forecast explaining the projected (expected) sales you plan to achieve for your product using your strategy.
12. Operations Plan
To operate a business means to administer (run, manage) a business. So then, your operations plan will discuss the ways you plan to run your business. Note that in the business context, it is the plural form of the word “operations” that is used.
13. Day-to-day Business Operations
In this section, you must be quite detailed in describing your day-to-day business operations which refers to how you will run your business functions on a daily basis.
For instance, according to USA Today, how you run your day-to-day operations can make a difference in how smoothly your business runs overall, as well as if you can pay your bills and be profitable.
14. Research and Development (R&D)
If your company is going to grow, you need to conduct research and development (R&D). You will eventually need to develop new products and research new ways to improve existing products.
Your potential investors will be interested to know what research and development efforts you have planned for your company and products, so that you can keep up with time, trends and technology. Be sure to do a good job planning and writing about this topic.
15. Management Summary
The management summary section of a business plan discusses the current members of your management team, as well as their professional backgrounds and roles in the company.
16. Organizational Structure
Your company’s organizational structure should clearly show the hierarchy (levels) of job and supervision functions. You commonly see a company’s organizational structure in the form of a chart showing photos of staff, their positions and levels of reporting.
In startups (newly formed companies), it is common to find gaps in the organizational structure for positions that are yet to be filled. This is why you will need a human resource plan.
17. Human Resource Plan
A human resource plan will map out the manpower (staff) you plan to hire in the future. Ask yourself:
- Who do you plan to hire?
- What will their roles be in the business?
- How can professionals with certain skills help your business grow in the future?
18. Financial Plan
The financial plan is the final and most important section of a business plan. It details how you plan to achieve your business goals, generate revenue and make a profit.
The phrase “generate revenue” is a term used in business to mean “make money” or “earn income.”
19. Revenue Model
Your investors will be interested to see your revenue model. Show them your sources of revenue, or the ways you plan to generate revenue for your company. Where will the revenue come from? Some questions you might ask yourself here would be:
- Do you sell a product or service?
- How do you price your product?
- What is your product’s potential for making profit?
20. Funding Requirement
Last but not least, you want to state your funding requirement. This refers to the amount of money or financing you will need based on what you have stated in the sections above. Most importantly, you want to let your investors know how you plan to use this money wisely.
That is all for today.
One last thing to know before you go. While a business plan is often used to convince investors and lenders (such as banks) to finance your business, it is also a tool that you can use yourself.
As you build and expand your business, always look at your original business plan and remember your strategies.
I hope these essential business terms we have just discussed will help you write a simple but impressive business plan.