Making A Plan For The Future May 18, 2009
Parts of a Business Plan
The importance of a business plan is two-fold: it helps to guide a company in its early, developmental years, and it provides potential investors with basic information about the company. All parts of the business plan should be concise, distinctive, and convincing.
Section 1: Executive Summary
The Executive Summary gives a brief overview (1-2 pages) of a company and summarizes the important points of the business plan. It should capture the reader’s interest, so that he or she will want to learn more about the company and potentially invest in the business. The Executive Summary should include the following information: company profile, structure, and objectives, products/services offered, industry and market trends, investment considerations, and financial projections. Though this is the first section of a business plan, one should write this section last so that it encapsulates all aspects of the plan.
Section 2: Business Description
This section defines the company. It should include basic information, such as a mission statement, company history and strategy, description of products/services offered, product research, and major shareholders.
Section 3: Industry Analysis/Market Trends
In this section, describe your company’s industry and market, including industry growth, target demographics, and competition. Show how your company fits into, yet is unique within, the industry. Include statistics and visuals such as charts or graphs to convince the reader that the industry is strong and your company has great potential in the market.
Section 4: Management & Organization
Investors want to know who is running your business; include biographies (summarized accomplishments) of the management team in this section. Describe the organization of your company and focus on the strengths and core responsibilities of key team members, including owners, directors, advisors, and personnel.
Section 5: Operations
What good is a business plan if it is not implemented? This section tells how a company will implement the steps laid out in their plan. The following topics should be addressed in this section: detailed marketing plan, sales strategy and forecast, pricing strategy, production plan, customer support, and future goals.
Section 6: Possible Risks
This section gives investors an idea of how you will analyze progress and evaluate the steps taken by your business. Here, you should identify potential risks, possible solutions, contingency plans, and an exit strategy. Being upfront about possible milestones helps to develop a sense of respect and trust between entrepreneur and investor.
Section 7: Financial Projections
In this section, convince the reader that your company is a sound investment. For an existing company, include at least three years of actual performance data. For a new company, offer financial projections, including projected quarterly profit and/or loss, cash flow, and a balance sheet. Both existing and new companies should include key financial indicators, break-even analysis, and long-term plans.
Section 8: Appendix
The appendix is optional and gives the reader additional information about the company, including possible tax advantages, company reviews, brochures or advertisements, marketing questionnaires or polls, and existing trademark, patent, or copyright information.
