Whether you are just starting out or ready to expand your enterprise, a
business plan is your blueprint for success. Projecting three to five
years into the future, a business plan articulates your business goals
and clarifies your path to achieving those goals.
A business plan is essential to attracting investment for start ups. It is
also an important tool for managing and expanding an established
business.
Because each business is different, each business plan is different. But
every business plan should contain the following elements:
Executive Summary
This section offers a snapshot of your business plan. It touches on
your business’s mission, history, organization and structure. The
executive summary should provide a brief overview of your products
or services, your strategy for marketing your products or services, and
a summary of projected sales, profits and cash flows.
If you are using your business plan to attract investment, the executive
summary should also state how much capital you need and how you
intend to use it.
Because the executive summary encapsulates the entire business plan,
it will be the last section you write — and the first section of your
business plan.
Business Description
This section explains what your business does. It includes your
business’s history, mission, organizational structure and strategy for
marketing. It should also cover administrative issues such as business
location, legal structure and personnel, and explain how you will
handle accounting, insurance, legal and security matters.
Market Analysis
This section describes your industry, the market for your products or
services and the competition your business faces. Whether you hire a
market-research company or use the Internet, your market analysis
should be based on real data and demonstrate how your business will
be successful. Your market analysis describes your industry’s current
size, historic growth and trends; pinpoints your target market, its
distinguishing characteristics and needs; and identifies your
competition, its strengths and its weaknesses.
Organization and Management
This section captures the organizational structure of your business and
the background of its key people. It discusses your business’s
divisions, their respective responsibilities and how they interact.
Including organizational charts can be a good way to convey this
information visually. You should also include the experience and
responsibilities of your business’s executives. Show how each will
help your business achieve its goals.
Product or Service
In this section, you should highlight the product(s) or service(s) your
business provides and what makes it superior to the competition.
Show how your product or service will satisfy a need in your target
market and help your business maintain a competitive advantage. You
should also include the scheduling, costs and personnel needed to
deliver your product or service, along with any potential risks and how
you will mitigate those risks.
Marketing and Sales Strategy
This section details how you will market and sell your product or
service. The marketing strategy includes how you will identify and
attract customers; how you will grow your business; how you will
distribute your product or service; and how you will communicate
with your target market. The sales strategy outlines how you intend to
sell your product.
Funding Request (Optional)
If you are using your business plan to attract investors, this section
should state the capital your business requires and how your business
will use that capital.
Financial Projections
This section forecasts the future financial health of your business. It
should include three documents: an income statement projecting how
much your company will earn or lose; a cash-flow statement
illustrating how much cash your business will need and where that
cash will come from; and a balance sheet reflecting how much your
business will own versus how much it will owe. A good business plan
provides monthly projections for the first year, quarterly projections
for the second year, and annual projections for your plan’s remaining
years. To ensure parity, you should complete this section after your
organizational and marketing sections. Established businesses should
also provide historical financial data. Income statements, cash-flow
statements and balance sheets for the previous five years should
suffice.
Appendix
This section includes supplemental materials such as resumes of your
company’s leaders, product designs, complete market analysis, legal
documents and reference letters. The appendix should be provided on
an as-needed basis — especially if it contains sensitive information.
Once you have completed your business plan, review it regularly to
monitor the progress of your business and make necessary
adjustments.
Keep a record of every business plan you distribute. This allows you
to update all copies of your business plan — and ensures your
information stays in the right hands. If you plan to give your business
plan to private investors, include a private placement disclaimer. This
disclaimer prohibits the investor from distributing your information
and should be placed at the beginning of your business plan.
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