The Elements of a Business Plan
Mission Statement
Executive Summary
The Company and its Product(s) and Service(s)
Marketing Plan
Management Team
Financial Plan
Appendices
Mission Statement
This is where you include the vision of your company. This statement represents
what your company stands for, where your importance lies in the company and what
your focus is for the future of your business and your customers.
Executive Summary
This section is the most important part of the business plan. It summarizes
the whole business plan. The length of the executive summary should be limited
to two pages. It should include a summary of all of the important sections of
your business plan including the following:
Business concept: The beginning statement should get the attention
of the reader.
Product/service: Describe the product or service you offer.
Marketing plan: Discuss who your customers are, your competition,
competitive edges, and the pricing of your product or service.
Management team: This section would discuss your key management
personnel and their specific duties.
Financial plan: Include your best estimates of your businesses
financial needs.
Remember, the executive summary is the first section the reader is introduced
to your company's concept and this is why it is so crucial to get it right.
The Company and It's Product(s) or Service(s)
Business Description
- Give the legalities of your business including the form of business, and
the needed licenses or permits.
- Describe your type of business.
- Discuss the product or service that you offer.
- Explain the current status of your business. Is it a new independently running
business, a takeover, are you expanding, or maybe a franchise?
- Discuss the reasons why this business will be profitable.
- Present the growth opportunities of your business.
- Include the days and times your business is operational.
The Company and the Concept
- Describe what business your company is in, or will enter.
- Give the legal name of the business, address, phone number, and legal form
of business.
- Explain why you chose this type of business.
- If your company has been in business for several years, review its prior
sales and profit performance. If your company has had setbacks, discuss these
and emphasize what has or will be done.
- Present the current status and prospects for the industry in which you operate.
Product(s) or Service(s)
- Describe in some detail your product or service.
- Highlight any differences between what is currently on the market and your
product or service.
Facilities and Improvements
- Describe the current or planned geographical location of your business.
- For an existing business, describe the facilities, including plant, special
tooling, and machinery currently used to conduct business, and discuss whether
these facilities are adequate.
- For start-up, describe how and when the necessary facilities will be acquired.
Discuss whether equipment and space will be leased or bought and indicate the
costs and timing of such actions.
The Location
- Describe your location needs.
- Describe the kind of space that is needed.
- Present the benefits of the building or area that you are considering.
- Give the accessibility of the location. Include if there is public transportation
available, and if there is adequate lighting.
- Discuss the occurrence of market shifts or demographic shifts if applicable.
Marketing Plan
Because of the importance of market analysis, you may want to prepare this
section of the business plan before any other. Give yourself enough time to be
very thorough. This section is usually the most difficult to prepare, but it
is the most important.
Customers
- Discuss who the customers for the product(s) or service(s) are or will be.
For example, if you manufacture an automotive part, the part might be sold to
automotive manufacturers and to parts distributors, so the discussion would need
to reflect two market segments. The number of potential customers and the share
of the market you plan to obtain.
- List any orders, contracts, or letters of commitment that you have.
- For an existing business, list your principal current customers and qualify
the amount they buy each year.
Competition and Competitive Edges
- Make a realistic assessment of the strengths and weaknesses of your competitors.
- Compare competing products or services on the basis of quality, price, performance,
service, and warranties.
- Discuss your three or four key competitors and why customers buy from them.
From what you know about the competitor's operations, explain why you think customers
might leave them. Discuss what makes you think it will be easy or difficult to
compete with them.
Advertising and Promotion
- Describe the approaches you will use to bring your product or service to
the attention of prospective purchasers.
- Present a schedule and approximate cost of promotion and advertising for
one year.
Pricing
- Discuss the prices to be charged for your product and service. Compare your
pricing policy with those of your major competitors.
- Describe any discount allowance for prompt payment or volume purchases.
Management Team
This section is a description of the key management personnel and their primary
duties. The existence of the proper balance of technical, managerial and business
experience should be demonstrated.
Organization and Key Management Personnel
- Present the key management roles in the company and the individuals who will
fill each position. (If the company is of sufficient size, an organizational
chart needs to be included.)
- Discuss any current or past situations where key management people have worked
together that could indicate how their skills complement each other and result
in an effective management team.
- For each key person, describe career highlights, particularly relevant know-how,
skills, and track record of accomplishments, that demonstrate an ability to perform
the assigned role.
Management Compensation and Ownership
- Compensation - State the salary to be paid, the stock ownership planned,
and the amount of equity investment of each key member of management.
- Other Investors- Describe any other investors in your venture, the number
and percent of outstanding shares they own, when they were acquired and at what
price.
- Supporting Professional Advisors and Services- Indicate the names and affiliations
of your legal and accounting advisors.
The Financial Plan
The financial plan needs to represent your best estimates of financial requirements.
The purpose of the financial plan is to indicate the venture's potential and
to present a timetable for financial success.
Actual Income Statements and Balance Sheets- For an existing
business, provide income statements and balance sheets for the current year and
for the prior three years. The current financial statement should be no older
than 90 days old. A listing of accounts receivable and accounts payable should
be included.
Projections- Include any projections you have. For start-up or expanding
companies, project cash flow monthly for twenty-four months of operation and
project the income statement monthly for the first year and annually for the
next two years.
Assumptions for Projections- Fully discuss assumptions made in preparing
the projections, such as the timing of collection of receivables, trade discounts
given, terms of payments to vendors, planned salary and wage increases, anticipated
increases in any operating expenses, seasonality characteristics of the business
as they affect inventory requirements, inventory turnovers per year and capital
equipment purchases.
Source and Use of Funds
- Give the specific uses of the money you will be using.
- Give the sources of the money, for instance how much you are putting into
the business and how much you want to borrow.
Appendix:
Use sparingly, only including vital information to reader's understanding
of plan.
Back to Writing a Business Plan.
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