The Business Plan

A business plan is a formal statement of a set of goals, the reasons they are believed attainable, and the plan for reaching those goals.

Learning Objective

Name the components that make up a business plan

Key Points

The key elements of a business plan include a comprehensive set of relevant information—from market analysis to company financials.
If the company is seeking funding the business plan gives potential investors an understanding of your proposed business and the money required.
The business plan is a critical vehicle for communicating both internally and externally how a company intends to conduct business.
A business plan establishes goals and objections that allow the leadership to assess how well a company is doing based on its established goals and objections.

Terms

business plan
a summary of how a venture owner, manager, or entrepreneur intends to organize an entrepreneurial endeavor and implement activities necessary and sufficient for the venture to succeed
Executive Summary
The executive summary is a snapshot of your business plan as a whole and touches on your company profile and goals.
Financial Projections
The financials provide information on the proposed spending and revenues of the company, typically for the first 3 to 5 years of operation. Again ,if funding is required this section details the expected cash flows and other critical financial projections to allow potential investors to understand the risks and returns they can expect
market analysis
Provides the specific industry, market, and competitive analysis information needed to understand where and how the company is positioned in the overall market.

Example

Elements of a Business Plan: Cover sheet, Executive summary (statement of the business purpose), Table of contents, Body of the document, Business Description of business, Marketing Competition, Operating procedures, Personnel Business insurance, Financial data, Loan applications, Capital equipment and supply list, Balance sheet Break-even analysis, Profit and loss statements, Three-year summary, Detail by month -- first year, Detail by quarters -- second and third year, Assumptions upon which projections were based, Pro-forma cash flow, Supporting documents, Tax returns of principals (partners in the business) for last three years, Personal financial statements (all banks have these forms), Copy of franchise contract and all supporting documents provided by the franchisor (for franchise businesses), Copy of proposed lease or purchase agreement for building space, Copy of licenses and other legal documents, Copy of resumes of all principals, Copies of letters of intent from suppliers, etc.

Full Text

A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals. Business plans may also target changes in perception and branding by the customer, client, taxpayer, or larger community.

Essential Elements of a Business Plan

The key elements of a business plan include a comprehensive presentation of relevant information, from market analysis to company financials. If the company is seeking funding, the business plan gives potential investors an understanding of your proposed business and the money required. The following categories are important inclusions in any business plan:

Business Plan Executive Summary: The executive summary is a snapshot of your business plan as a whole and touches on your company profile and goals. This section offers tips on what to include and how to keep it brief and succinct.
Market Analysis: Provides the specific industry, market, and competitive analysis information needed to understand where and how the company is positioned in the overall market.
Company Description: Company description answers certain questions. What do you do? What differentiates your business from current providers? Which markets do you serve?
Marketing & Sales Management: The marketing and sales section explains how the company plans to market your business and what is your sales strategy. It outlines in the broadest sense how your firm will communicate with potential customers and suppliers.
Service or Product Line: Service and product lines details exactly what your firms sells and how does it deliver value to your customers. Information about the firm's R&D activities and the product lifecycle should be included in this section.
Funding Request: If you are seeking funding for your business, find out what information you need to include in your plan to ensure success.
Financial Projections: The financials provide information on the proposed spending and revenues of the company, typically for the first 3 to 5 years of operation. Again ,if funding is required this section details the expected cash flows and other critical financial projections to allow potential investors to understand the risks and returns they can expect.
Appendix: An appendix is optional, but a useful place to include resumes of the leadership team, permits, leases, and and any other pertinent information that is material to the operations of the company.

Business Plan

Preparing A Business Plan

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