Updated July 21, 2020
A business plan is a road map for your business’s success. Once you make the commitment to start your own small business, you need to have a plan for how you will run and maintain it. Without a carefully crafted business plan for your company, you’ll lack the organization and vision necessary to succeed. Also, in order to apply for certain business loans, it’s required that you provide a business plan for the lender’s review and consideration.
Here is a step-by-step guide to the most critical elements that every business plan should include.
1. Executive Summary
This summary clearly states the goals of your business and your roadmap for how you’ll get there. It should communicate to the reader exactly what you wish to accomplish and how you’ll make it possible. Be sure to include your mission statement, general details about the company (where it was formed, who its founders are, location, size, etc.), and the products and/or services your business has to offer.
2. Company Description
In the business description, not only should you describe your individual business, but you should also provide some information pertaining to the industry in which your business operates. Illustrate how the industry is performing at present and where you predict it to go in the future. When describing your own business, including a thorough description of what type of business you operate (ex. wholesale, retail, service), its legal form (ex. corporation, partnership), and the target market you are serving.
3. Business Organization and Management Team
Layout the makeup of your organizational structure in this section. Give brief profiles of your business owners, management team, and board of directors if you have one and provide information about who does what. How many departments is your business divided into? Who is responsible for which tasks? Answer these questions in this section, and use your organizational chart to create a narrative for the oversight of the business.
4. Product and Service Offering
This section of your business plan should detail information about the product or service that your business provides. You should talk about how your product or service works, including why it is needed and some key features of what you are offering. You should talk about pricing, and why your prices are what they are. Furthermore, focus on the advantages of your product, as well as how purchase orders will be filled. It is important to be as clear and concise as possible, but still covering all the important information.
5. Sales and Marketing Plan
This section of your business plan should include both your overall marketing strategy and your overall sales strategy. Write out how the business will grow, distribute products or services, and communicate. Talk about your website: how you came to choose the domain name, your tagline, why it’s designed the way it is, and how you envision the public using and interacting with it. You should also outline your plans for promotions, advertisements, and public relations. Put into words how your business will be marketing to its target market.
The sales portion of this section should detail both your strategy and the tactics you plan for your business’s sales activities. In other words, how you are going to structure your company’s sales force, training, and recruitment, and also how you will identify and prioritize your sales contacts.
6. Market Analysis
In this section of your business plan, you’ll want to conduct market research and write in further detail about the industry your business is in, your target market, and your competition. Include the industry’s size, how it has grown in the past, and how it’s projected to grow in the future, along with notable trends seen in past years.
Identify your target market and key facts about it, such as its size, purchasing history, and its potential for growth and change. Then, describe the market in terms of the competition your business will face. Assess any windows of opportunity or potential barriers to entering the market and what share of the market you see your business being able to gain.
7. Financial Statements
This is the section where you are writing any financial information that the company already has. This is only important if your company has already been in business for any length of time. You should include a balance sheet, which comprises the company’s assets, liabilities, and owner’s or stockholders’ equity. You should also include a cash flow statement, which basically summarizes all the money flowing in and out of your business. Include a profit-and-loss statement, detailing the ups and downs of your business as it’s been running. Write down any other financial information that will be useful in helping learn more about your business.
8. Financial Projections
In this part of your business plan, you should write what you think your business is capable of accomplishing financially over the next five years. Include forecasted financial documents (like income statements and budgets) for each of the years. Break down the first year into months, then keep the following years arranged in larger segments, be it quarters or even full years.
No two business plans are going to look exactly the same. The data and insight that will be most useful to your business might not be that which is most useful to another. Follow these guidelines on how to break down your financial plan into sections and prioritize what goals, data, and general information will be most important to your business in its startup phase and in the next few years to come.
9. Appendix
The appendix is typically the last section of a business plan and includes any documents you have to support your business plan. This is very important, especially if you are seeking a business loan or working with potential investors. The appendix can include supplemental graphs/tables, any agreements or contracts that you have with clients or vendors, licenses/permits/patents or any other trademark documentation, resumes, contact information, or any other documents you can think of that will help your business seem more safe and credible. Do not skimp over the appendix, as this section can provide the comfort needed to pull in investors that seem on the edge.
Author Bio
Jeffrey Bumbales
Director, Marketing & Strategic Partnerships
