In our last blog post we discussed the importance of having a business plan. Today, we will break down each section of the business plan and explain its requirements. We hope this guide empowers entrepreneurs to create stellar business plans and succeed in their ventures.
Every business plan is unique. However, the most important sections include the:
- Executive Summary
- Company Profile
- Market Research
- Marketing Plan
- Operations Plan
- Financial Plan
Here’s what to include in each of those sections.
The executive summary is a short overview of the business plan, no more than a page long. For shorter business plans, the executive summary might be a concise paragraph that describes the business and its goals. More complicated business plans might have a summary that is divided into subsections. Each subsection usually includes a quick summary of each section of the business plan.
These elements could include a:
- Company Profile: Description of the business and the services/products it offers. Ensure you highlight your company’s unique value to consumers.
- Purpose: Summary of your business objectives.
- Market Summary: Information about the current market landscape and your target market.
- Financial Analysis: Quick synopsis of your business’ finances including capital raised, capital needed, and projected growth.
Although first in a business plan, the executive summary should be written last. It will be easier to write after you have completed your research and have a better understanding of the contents of your business plan.
Company Description or Profile
A detailed description of your business structure. Like the executive summary, this can be further broken down into subsections.
While all sections may not be necessary for all businesses, they can include:
- Company Name: Registered name of your business
- Location: Primary location of operations
- Products/Services Offered: Statement of all products/services offered, including future offerings
- Legal Structure: Is it a sole proprietorship, partnership, or corporation?
- Company History: Synopsis of the inspiration behind the business and current standing
- Vision and Mission: Guiding statements that reflect your values and purpose
- Management: Key names behind the business and their roles
This section provides a researched overview of the industry that your business intends to operate in. The research will help determine whether the business is viable and will succeed. Claims made in this section should be supported with numbers and statistics from reliable sources.
Sections should include:
- Industry Profile: Determine the trends, size, growth, and potential of the industry. Demonstrate a need in the market for your company.
- Local Market: A more detailed and geographically focused study on the needs and size of the local market.
- Test Results: The results of your original primary research. Supporting materials such as testing parameters or process can be added to an appendix at the end of the business plan.
- Target Market: Outline of the ideal customer group (there may be more than one group) including their size, demographic, and psychographic.
- SWOT Analysis: Chart of the Strengths, Weaknesses, Opportunities, and Threats (SWOT) of competitors and your own business.
A clear, defined marketing strategy illustrates how you plan to attract new customers and make sales. It should be well thought out and detailed enough for you to follow through on.
A marketing plan should follow the 4 Ps:
- Product: All product/service offerings. Consider all elements like packaging, presentation, and warranty.
- Price: Price range for each product/services. Consider prices for sales, product bundling, and returning business.
- Promotion: How consumers will see and learn about your products/services. Consider your objectives, strategy, budget, marketing channels, materials, and sales promotions.
- Place: Where customers can purchase your products/services, including physical and digital spaces.
This sections covers the logistical day-to-day realities of your business. A detailed, realistic operations plan and consideration of operating costs will help you create a better financial plan in the following section. It shows investors that you have carefully thought out how your business will run.
Things to consider include:
- Retail space
- Office space
- Warehouse space
- Parking space
- Tools, technology, and office equipment
- Primary and secondary sourcing
- Payment agreements
- Product storage
- Tracking ingoing and outgoing inventory
- Turnover rates
- Seasonal changes
- Inhouse fulfillment
- Third-party fulfillment
- Administration & Personnel:
- Contract, part-time, and full-time employees
- Training costs
- Pay structures
- Patents and copyright
- Partnership agreements
To investors, the financial plan is the most important part of any business plan. It consists of financial forecasts that indicate the business’ viability over time. It all comes down to the numbers.
While it is necessary to have a strong financial plan, don’t neglect the other parts! A business plan should be well rounded, clean, and articulate at every stage.
The most important sections of a financial plan include the:
- Balance Sheet: An assessment of a business’ financial position, or net worth, at a given point in time.
- Assets – Liabilities = Equity
- Income Statement: A summary of projected expenses and revenues over a defined period of time—typically a quarter or a year– to determine net profit. It demonstrates whether the business will be profitable over time.
- Earnings – Costs = Profit
- Cashflow Statement: Analysis of inflow and outflow of cash during a period of time. It begins with a starting balance and finishes with the end balance.
- Beginning cash + Projected inflow – Projected outflow = Cash flow forecast
- Break Even Analysis: The break-even point is when there is no net loss or gain in a transaction. It calculates the cost of doing business.
- Fixed costs / Average sales price = Break even