Elements of a Business Plan

Business plans can flow easily from your pen ( or computer) or they can be a process that takes many hours.  Whatever amount of time it takes to draft your business plan, think of it as time well spent because you will appreciate that plan as you move forward in your business.

A good business plan will include each of the following elements:

Executive Summary

The executive summary section of your business plan should be written last because its purpose is what the title infers, it’s a summary of all of the following sections.  This section should be one or two pages, maximum.  It should include who the owners are, your product or service, your anticipated clients, and how future events will affect your company.  It should be written like you would write an elevator speech and be memorable, yet professional.  If you are using your business plan to request financial assistance you should include how much money you require and how you will use it to grow your business.

General Company Description

This section will include what product or service you will provide, your mission statement, your company goals and objectives, and what is important for you in your business or your philosophy.  In addition, you should describe your target market (who your clients are or will be), a description of your industry and any issues with duration of the industry, competitive strengths and how your skills and background will add to this, and, finally, the type of business entity you will function under.

Products or Services

This section is where you describe, in detail, the products and/or services that you provide.  You can provide detailed drawings, brochures, etc. as attachments to your business plan however a detailed description is sufficient.  In addition, this section of your business plan should include the competitive advantages or disadvantages that you will face and your pricing or fees.

Marketing Plan

For many, with the exception of those who grew up marketing, this section is the most difficult to complete, however, it is often the most important section of your plan.  The marketing plan should include many elements that encompass, well, marketing your product or service.  In short, this section should describe your competitors, your clients, your distinguishing factors and how you will market to your products or services to your potential clients.  For a more detailed explanation, please see my post on What Goes Into a Marketing Plan.

Operational Plan

The way that your business will function on a daily basis is important to think through and figure out.  This section documents the day-to-day operations in your business plan, including where and how your products or services are produced or provided, the location that you need to have both in terms of location on the map and in determining the amount of space you will need to operate, any barriers to entry such as licenses, employees including the number and the amount you anticipate paying them, any key suppliers should be spelled out, and, finally, your payment terms and credit policies, if any.

Management and Organization

You should include the government of your company, will it be the sole owner who dictates how the company will be run or will you have a board of directors or advisors?  You should also include the names and contact information for your attorney, accountant, insurance agent, and any other key advisors in this section of your business plan.

Personal Financial Statements

You should include the personal assets and liabilities for each of the owners of the business so you know what assets you may have to rely on to grow your business.

Start Up Expenses and Capitalization

The start up expenses for a company can be unpredictable and surprising.  To help guard against these surprises you should research and document any and all anticipated start up expenses in this section.  Of course, there will almost always be some surprises however if your research is thorough you should be able to minimize those unpleasant  experiences.  Further, this section of your business plan should include how you will pay for those expenses that you anticipate as well as those that are surprises.  This is also the place to describe how you determined what these costs would be, including the details of any research you performed as well as any formulas you used to forecast these expenses.

Financial Plan

As I’m sure you noted, many of the above sections deal with financial aspects of the business, however, this part of the business plan is where it all comes together.  You should include a 12-month profit and loss analysis, your projected cash flow, your balance sheets including an opening day balance sheet and, possibly, a projected balance sheet, and a break-even analysis.

Appendices

Finally, this section of your business plan is where you will include details of the information provided in the above section.  Examples are a map of your location, all equipment and supplies needed for your business, etc.

Although each of the above categories are recommended for a thorough business plan, your plan can be much more concise and general.  The most important part is that you have a business plan in place to refer to as needed. Do you have a business plan and is it up to date?

If you are needing help with your business planning  contact us to schedule your comprehensive Business Building Benchmark today so we can identify the best course of action for you. 

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Written by Integrated General Counsel

Our focus includes handling a variety of corporate matters and also includes litigation in state and federal courts. Our current practice includes providing transactional services and representing a variety of small and medium-sized companies as their outsourced general counsel.