How to Make a CPG Business Plan for Food Brands
Every business launching a new idea or product needs a business plan to be successful. Are you wondering how to create a thorough business plan for your new CPG food idea? Then this article is for you!
In this article, we will take you through the main elements of a traditional business plan; you’ll learn how to write a CPG business plan from start to end. The main questions we’ll cover are what is a business plan, why do you need a business plan for a CPG brand, what are the types of business plans a CPG company can use, what are the elements of a traditional format business plan, and what are some tips for new CPG businesses to get started?
What is a business plan?
A business plan is a document that details a company and its product’s objectives, as well as business strategies to achieve the goals. It outlines a company’s finances, goals, opportunities, and future. A CPG business plan should be written in the early stages of launch but can range depending on the goals of the CPG owners. You can choose to write a business plan before launching or even after to gauge market preferences.
Why do you need a business plan for a CPG brand?
A business plan allows you to communicate your vision clearly to potential stakeholders, attain useful research for strategy formulation, and establish growth milestones to monitor success.
Communicating a clear vision allows for businesses to demonstrate their value to potential stakeholders such as business associates, retail buyers, and later on, investors, and banks. By having a clear mission and business plan for your CPG product, you can receive sufficient funding from investors.
A business plan also pushes you to conduct thorough research about different strategies and your target market. This information can help your team evaluate the feasibility of plans and allows you to better focus objectives for more realistic growth.
What are the types of business plans?
There are two main types of business plans: lean and traditional. A lean business plan is less widely-used. It focuses on key details and elements. These key details usually entail information mostly about strategies. Lean business plans are more flexible and easier to update, because of this, another advantage of a lean plan would be an earlier product launch.
The more widely used business plan is the traditional format. The traditional format business plan is usually 15-25 pages long and includes more detailed information compared to the lean business plan. A traditional business plan is more favored because it eliminates the risk of rushing a product to market too soon and helps you get financing for your business.
What are the elements of the traditional format?
- Executive summary
The first part of the business plan is the executive summary. This section is usually one page and is located in the beginning of the document. The executive summary must be thorough and concise, as it gives the first impression of the whole company to stakeholders . The purpose of an executive summary is to highlight the most important information of the business plan, which usually includes the product, market research, sales strategy, management, financials, and potential growth. The executive summary is normally written last, once all information and data has been gathered.
- Company description
In the company description, you will give an overview of your company idea. In this section you should list your unique selling point and competitive advantages of your company. Within the company description, you should also include your registered name, address, and mission statement. Ultimately, readers should be able to take away the scope, vision, and intent for your whole company from this section.
- Product information
The product information section should explain the problem that your CPG product will try to solve in the food market. Explain the gap in products solving this problem and how there is a need for a solution. An example may be that there are limited product lines that sell gluten-free cakes that are full of natural, less processed ingredients. For that reason, a brand might emerge to fill this gap.
Explain how your CPG product will meet the needs of consumers and solve their problem. Detail why customers would buy your product specifically and what makes it different from others.
- Market analysis
A market analysis would contain information relating to the target market. This includes demographic, geographic, and psychographic data about potential or current customers. This section may also have a competitive analysis of the market and may detail possible trends or opportunities to reach different customer segments.
- Marketing Plan
This section will focus on how you will get your product known by your target market. It will have an explanation on how you’ll get customers to buy from you.
- Pricing plan: The pricing plan should discuss how you price your product. The price should be competitive and reasonable in the market, but also profitable. Some pricing strategies include cost-plus pricing, competitive pricing, and value-based pricing.
- Sales strategy: In this section you should discuss how your product will retain and acquire existing and new customers. The sales strategy should include various tactics, objectives, and forecasting to long-term revenue.
- Proposed promotional activities: This section should focus on your marketing and public relations activities. This includes discussing advertising and promotion channels such as social media, grocery samples, referrals, flyers and affiliates, etc.
The marketing plan can also include how you plan on working with retailers and distributors, and the different channels you’ll be selling your products through.
- Company organizational structure
In this section of the business plan, you should outline the company’s organizational structure. This includes listing the type of company it is, whether that be a sole proprietorship, corporation, partnership, or LLC. For CPG food business startups, we recommend LLCs for the limited liability you will take on as an owner. This section should also include the hierarchy of the team and explain how management will be organized. You can include the various roles and each role’s responsibilities. When including detailed information about your team, make sure to highlight members’ skills and experience. Not only can you list your management team but you can also include information about the board of directors or other support professionals. By listing your management team’s skills and expertise, you can garner more credibility for stakeholders to invest in your CPG product.
- Financial projections
Financial projections are another valuable and important part of the business plan because it shows overall profitability and potential growth. By forecasting and analyzing future revenue and expenses based on the data gathered, business owners will be able to estimate possible costs and prepare adequately. In order to forecast the business’ financials, there are financial statements that should be observed. These three statements are the income statement, balance sheet, and the cash flow statement.
The appendix belongs at the end of your business plan. This section includes any supporting information or sample materials to establish your credibility. Some examples are resumes, property rights, charts/tables, illustrations, licenses, agreements, press clippings, contracts, and other legal papers.
- Proofread. Read over your work and make sure there are no grammatical or spelling errors. Your business plan should be looked over by not only you but other trusted mentors or peers to ensure that there are no mistakes or issues that you could’ve easily looked over.
- Don’t exaggerate or fabricate information or data. Make an accurate estimate of your numbers. Exaggerating can push your investors to be suspicious and turn them away from your business.
- Research your competitive market. Do your research and look at other examples and competitors. This can help guide you in making your business plan.
- Set clear goals. Make sure your goals are feasible and realistic. By having realistic goals, you are setting yourself up for reasonable milestones that are achievable in a given timeline.
- Continue to revise and edit. Your business plan should not be a one-and-done assignment. You should re-evaluate and revise different strategies or objectives to any new changes in information.
Business plans require thorough research and data to have accurate information that’ll help your company grow in both the short-term and long-run. Although there are many components to a business plan, CPG brands should aim to accurately include all information possible to maximize success in the competitive retail industry.