Contents of a Written Business Plan

A business plan and financial plan are essential for startup businesses. Entrepreneurs need one for business planning, expanding an existing business, and securing debt or equity financing. From a practical standpoint, a business plan serves as a road map or step-by-step overview of your plan to grow the business and your business idea.

Creating a good business plan is one of the most important tasks when starting a small business. A business plan that defines and identifies goals helps business owners focus. It also provides direction and focus for their employees. Potential investors and lenders want to see your business plan and business model forecasts.

This article outlines a typical business plan so you can quickly start your roadmap for your own business.

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Types of Business Plans

Writing your business plan before you start your business is important. It will serve as a roadmap for both your business and potential lenders and investors. 

There are several types of business plans for different types of growth opportunities:

• Startup
• Acquisition
• Repositioning
• Expansion

Different plans may have additional content based on their goals and the needs of their audience. This article does not focus on a plan format but does provide an outline of the information you’ll need to include in your business plan.

How Long Should My Business Plan Be?

The amount of detail in a business plan is up to you and your legal structure. The U.S. Small Business Administration (SBA) provides a traditional business plan template and a lean business plan template for businesses looking to start operations.

Whatever type of plan you choose, the following components should be in every business plan:

Cover Page

The cover page should include the following:

• Company name
• Logo
• Contact person
• Address, email, and phone number
• Date and state of incorporation (if you have not formed yet, list where you will form)
• Confidentiality and nondisclosure statement

Executive Summary

An executive summary is a potential investor or lender’s first impression of your small business. Consider this a standalone document. The Small Business Administration suggests an executive summary should be tailored to the person reading it, like an investor or business loan officer.

It should briefly list:

• Company description or brief mission statement
• Type of legal structure
• Market opportunity and target market
• Owner and management team background
• Current stage of the business. Have you formed, or are you waiting to do so?
• Marketing plan, and revenue and profit expectations

If a prospective funder reads nothing else, they will read the executive summary. Make it dynamic, engaging, and memorable.

Table of Contents and Table of Appendices

The table of contents at the front of the plan and the table of appendices at the end of the plan should refer the reader to the sections and subsections of the business plan. You want it easy for someone to read and find information in your business plan. Make sure the table of contents has the correct page numbers next to each section of your business plan.

Body of the Plan

This is the heart of your business plan, where you go into detail.

Company Overview/Business Description

Your company overview is your one-page business plan. It is similar to the executive summary but should be one page.

The business description should include:

• 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, along with any milestones you have already met

Provide details on the history of the company, including how the company was formed and its locations of operation. If you have many locations, list your headquarters and states. If the company still needs to be formed, briefly explain how you got the idea for the business and where you will operate.

Market Analysis

Market analysis reviews and assesses your target market’s demand for your product or service. 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.

Include:

• Information about the overall industry or market, including your specific market segment and market niche
• A competitor analysis that includes competitor weaknesses and strengths, and how your company is unique. Do not overlook competitive challenges.
• A customer analysis should include demographics, needs, and pain points. How can your product or service help them?

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.

Product or Service Development

In this section, you’ll include:

• Research and development
• Production requirements and process (products)
• Service provider requirements and processes (service-based industry like counseling centers or hair salons)
• Proprietary features and intellectual property protections
• Quality assurance measures

For a startup business, providing enough information about the new product or service will be important so that the reader or lender understands what they are being asked to invest in.

Marketing Plan and 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 incorporating your sales strategy and financial projections.

Include:

• Your market, its size, and locations. Are you a city-based business, or do you plan on operating in multiple states?
• Description of the potential customers in your area, where to find them, and how you will make them a customer of your product or service (customer acquisition)
• The marketing strategy: how you advertise or market your product or service.
• Social media strategy
• The pricing strategy for your product line or services

Include any test data, survey results, or other market research results demonstrating your customer knowledge. You can include a summary or graph. The entire test data or report can be added to your appendix to keep your reader’s attention.

Operations Plan

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
• Discuss any lease or rent agreements
• Explain what equipment, if any, you need to produce your products or services
• Explain the production and delivery of products and services

As a small business owner, you may need more 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 and can help with funding requests.

Organization Structure and Management Team

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

Investors invest in a business and the people who run it, not in specific products. They want to know that the business is in good hands. Information about the management team is critical for building confidence in the company.

Ownership and Capitalization

Include information about your:

• Business structure: What type are you using?
• Current capitalization: The allocation of your equity capital and debt capital. Who owns what percent or amount of capital, and how is it distributed?
• Forecasted capitalization: Explain to potential investors 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: Any proposed or necessary payments should stated.
• Exit strategy: How and when can investors get their money out of the business they provided a business loan or capital to?

Financial Management

In this section, you will provide financial data. This includes information about business finances and financial management.

• Current financial position
• Monthly operating budget for the first year
• Expected Return on Investment (ROI) 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 maintains accounting records
• How you will store the records

The business plan will explain your sources of funding and the amount of initial equity capital you have or will require.

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
• Inability to secure funding
• Inadequate capital
• Business cycles
• Industry trends

By facing these risks head-on in your business plan, you are letting investors and partners know you have a plan for them. You can be proactive rather than reactive.

Conclusion

In your conclusion, summarize your business goals and objectives. Express your commitment to the success of your business. Include a summary and a timetable for funding and future developments.

Appendices

This is where you include anything that is too bulky or does not fit the flow of the body of the business plan.

Here are some examples of documents commonly found in an appendix:

• Photographs of product or service
• Sales and profitability objectives
• Market surveys
• Production flowchart
• Marketing materials
• Advertisements
• Press releases
• Historical financial statements
• Table of current profit and loss statement
• Projected profit and loss statement
• Cash flow statements
• Cash flow projections
• Balance sheet
• Projected balance sheet
• Asset acquisition schedule
• Breakeven statement
• Key business contracts
• Intellectual property certificates or registrations

Your appendix needs to be thorough, but not overburdensome for the reader. Each item you include should have a meaningful purpose.

Reviewing Your Business Plan

Once you complete your business plan, reviewing it with a friend, family member, or business mentor is helpful. You can also review it with a business counselor at the Service Corps of Retired Executives (SCORE) or Small Business Development Center (SBDC).

Can You Change a Business Plan?

It’s important to remember that your business plan can change. If things change during the course of your business, you can and should edit it. It’s also possible to draft a whole new plan if you realize that your original plan no longer works for your business.

Can I Write a Business Plan Myself?

With this business plan template, you can. Depending on your industry and the nature of your startup, you may want to hire someone to write the business plan for you. You should at least consult with someone on it before submitting it to lenders or prospective partners.

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.