Contents of a Written Business Plan
A business plan is an essential document for start-up businesses, for business planning, and for securing debt or equity financing. From a practical standpoint, a business plan serves as a road map for how you plan to grow the business and take it to the next level.
There are several types of business plans for different types of growth opportunities:
- Startup plans
- Acquisition plans
- Repositioning plans
- Expansion plans
Different plans may have additional content based on their goals and the needs of their audience. This article will focus on the components that every type of business plan has in common.
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How Long Should Your Business Plan Be?
The U.S. Small Business Administration says that a basic business plan is typically 38-50 pages. A more complex plan could be 80 to 100 pages. The amount of detail provided in a business plan is up to you.
Components of a Written Business Plan
The following components should be in every business plan:
An Executive Summary is the first impression a potential investor or lender will have of you and your company. It needs to be good. It should succinctly describe the proposed business, the market opportunity, the background of the management team, the current stage of the business, the marketing plan, and revenue and profit expectations.
If a prospective funder reads nothing else, they will read the Executive Summary. Take extra time to get this right. Make it dynamic, interesting, and inspiring.
Consider this a standalone document. The Small Business Administration suggests an Executive Summary should be no more than four pages long.
The cover page should include the following:
- Company Name
- Contact person
- Address and phone number
- Date and state of incorporation
- Confidentiality and nondisclosure statement
Table of Contents and Table of Appendices
The Table of Contents and Table of Appendices should refer the reader to the sections and subsections of the business plan.
Body of the Plan
I. Company Overview/Business Description
Your company overview should include:
- The history of the company, including how the company was formed and its location of operation. If the company has not yet been formed, briefly explain how the idea for the business came to be and where it will be located.
- The owner or management team's experience in the industry
- The legal structure or expected legal structure
- The product or service concept, target customers, current customer base
- Business objectives you want to achieve and any milestones you have already met
II. Market/Industry Analysis
A good business plan includes a market analysis to assess the demand for your product or service in your target market. Most business plans contain a competitive analysis that breaks down the strengths and weaknesses of competitors and the strategies you believe will give you a competitive advantage.
Completing this section will require industry research, competitor research, and customer research. The writer's task is to show how the new business fits within the industry and its potential for success. Include:
- Information about the overall industry or market, including your specific market segment and market niche
- A competitor analysis, including competitor weaknesses and strengths, how your company distinguishes itself from competitors, and competitive challenges
- A customer analysis, including demographics, needs, and pain points
III. Product or Service Development
For a start-up business, it will be important to provide enough information about the new product or service that the reader understands what they are being asked to invest in, including:
- Research and development
- Production requirements and process
- Proprietary features and intellectual property protections
- Quality assurance measures
IV. Marketing/Sales Plan
While marketing is an important aspect of any business, it's especially important for a new business. Your business plan should include a marketing section in which you:
- Identify your market, its size, and locations
- Explain the marketing strategy, how your product/service will be advertised and marketed
- Explain the pricing strategy
- Include any test data, survey results, or other market research results that demonstrate your knowledge of your customers
V. Operations Plan
As the owner of a small business, you may not have the funds to delegate the operation of your business to others. Include a business operations plan in your business plan anyway. It will allow you to set goals. In your operations section, you should:
- Explain how the business will be managed on a day-to-day basis
- Discuss hiring and personnel procedures
- Discuss insurance, lease, or rent agreements
- Explain what equipment will be needed to produce your products or services
- Explain the production and delivery of products and services
VI. Organization Structure and Management Team
Investors invest in a business, not in products. They want to know that the business is in good hands. Information about the management team can be critical for building confidence in the company. Describe the qualifications and responsibilities of each member of the management team, including:
- Company leaders (include a professional resume of those in charge of the business)
- Directors and advisors
- Professional advisors
- Key future personnel
- Forecasted labor force
- Other key personnel
VII. Ownership and Capitalization
Include information about your:
- Business structure
- Current capitalization
- Forecasted capitalization: how much money is being sought, the form of the proposed investment, how the funds will be used, and the percentage of ownership to be provided in exchange for an investment
- Royalty or licensing arrangements
- Exit strategy: how and when investors may be able to get their money out of the business
VIII. Financial Management
In this section, you will provide information about business finances and financial management. The business plan will explain your sources of funding and the amount of initial equity capital you have or need.
- Current financial position
- Monthly operating budget for the first year
- Expected return on investment and monthly cash flow for the first year
- Projected income statements and balance sheets for a two-year period
- Breakeven analysis
- Method of compensation
- Cost control measures
- Who will maintain your accounting records and how they will be kept
IX. Risk Factors
Think through the risks your new company may face, such as:
- Failure to meet production deadlines
- Problems with labor, suppliers, or distributors
- Sales projections not met
- Cost overruns
- Unforeseen economic, social, or political developments
- Technological developments
- Inadequate capital
- Business cycles
- Industry trends
In your conclusion, summarize your business goals and objectives, and express your commitment to the success of your business. Include a:
- Timetable for funding and future developments
- Photographs of product or service
- Sales and profitability objectives
- Market surveys
- Production flowchart
- Marketing materials
- Press releases
- Historical financial statements
- Table of current profit and loss statement
- Projected profit and loss statement
- Cashflow projections
- Balance sheet
- Projected balance sheet
- Asset acquisition schedule
- Breakeven statement
- Key contracts
Once you have completed your business plan, it's helpful to review it with a friend, family member, or business associate. You can also speak with an experienced mentor or business counselor at the Service Corps of Retired Executives (SCORE) or Small Business Development Center (SBDC).
Questions About Your Startup? An Attorney Can Help
If you have questions about writing a good business plan or would like help with other aspects of starting a business, contact a business startup attorney near you.
For more information and resources related to this topic, you can visit FindLaw's Creating a Business Plan section.
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