What Should a Business Plan Include?
A business plan is your guide through every stage of building and growing your business.
It includes all of the key elements that make up business ownership, and is a critical component for start-ups looking for investors or lenders since it shows why you deserve their funding and their backing for your business.
Many entrepreneurs choose to hire a professional to help them with their business plan, which is an excellent way to go, though you should have a thorough understanding of every component of a business plan whether you're doing it yourself or not.
Since lean business plans are typically only one page long and are only a summary of your business, we'll only discuss the much more common traditional business plan since it takes much more work and can be dozens of pages long. Let's get started.
There are typically nine sections on a business plan:
- Executive Summary
- Company Description
- Market Analysis
- Organization and Management
- Service or Product Line
- Marketing and Sales
- Funding Request
- Financial Projections
The Executive Summary is the section of the business plan that introduces your company. You'll briefly explain what your company is, why it will be successful, and should include your product or service, your mission statement, basic information such as location and team members, financial information, and high-level growth plans for financing requests.
The Company Description provides the detailed information your reader needs about your company. This is an excellent area to describe how your company will fill a gap in the market in the people it serves and the problem it solves. Don't be afraid to aggressively boast your company's strengths.
Market Analysis is third in your business plan. You'll most likely need professional help with this part since you'll need a very thorough understanding of your target market, industry outlook, and market trends. Explain what competitors do to be successful and how you can do one better.
The Organization and Management section is where you'll explain who's running your company and how it is structured - an organization chart is perfect for a visual representation of this information. You'll also want to state your business' legal status as a type partnership, corporation, or sole proprietor.
The Service or Product Line description tells the reader what product you sell or the type of service you offer. You can share your copyright or patent filing details, the product lifecycle, the benefits to your customers, and any research and development you've initiated for your product or service.
The Marketing and Sales section is where you'll describe your plans for attracting and retaining customers. You should explain the sale process, your sales and marketing strategies, and your plans to adapt your strategies at certain stages of growth if applicable.
The Funding Request is where you get to outline your funding requirements and ask for financial assistance. Be as clear and precise as possible with your 5-year funding requirements so your potential investor/lender understands exactly what their money is for. You should include specific details about materials and equipment, pay salaries, bill payments, and other relevant expenditures. Make sure to also include all of your future strategic financial plans, including how you'll pay off your debt.
Financial Projections supplement your funding request with additional information that proves the stability and viability of your business. You'll want to include balance sheets, income statements, cash flow statements, and any other helpful information if you're already established. If you have collateral that can put against a loan, be sure to list it here as well. If you're not established yet, or don't have statements dating back 3-5 years, include forecasted numbers instead, and include capital expenditure budgets as well. Pro tip: include quarterly or monthly projections for your first year.
The Appendix is the place to include al supporting documents such as legal documents, licences, patents, and permits, resumes, credit histories, product pictures, reference letters, and any other relevant contracts.
That's it! You're ready to plan and write your business plan. If you already feel like you're in way over your head, let a professional help you get the most our of your business plan rather than going it alone.
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