While not always required, most entrepreneurs construct business plans before launching their businesses. A business plan is an important document that acts as a road map for your actions across all components of the business, and it can help to attract talent and investors. Learn more about the key sections of a business plan, and find out what you need to include in each section.
The Executive Summary
This small section, one or two pages, gives a concise overview of the entire plan. The goal of the executive summary is to attract readers and motivate them to read more about your company. It includes the business name and location, the products being offered, the company’s mission, and the purpose of the business plan.
The Business Description
The business description is the backbone of the entire business plan. In this section, give a high-level overview of your company, who you are and why you are qualified to run the business, and the goals of the company. Discuss the problem your business intends to solve and how its products and services will do it.
Lay out an in-depth description of the business’s products. Convey specific benefits of the product, how the business’s products are better than the competitors, relevant product life-cycle information, and any relevant proprietary information.
The Market Analysis
Using market research and actual quantifiable data, your market analysis describes the target market’s size and demographics. It includes historical, current, and projected market data for your business and its products. Describe strengths and weaknesses of your business and your competitors here, too.
The Strategy and Model
This section describes how the business will monetize its products and services. Describe the sales and marketing strategy in detail, as well as the plans for business operations. Include how you will reach target customers, pricing and promotion details, distribution plans, basic operational plans, roles of key individuals, and so on.
This section should include current and projected balance sheets, income statements, and cash flow statements. Historical data of three to five years for each of these statements should be included, if they’re available. Forecasted information should only go about two or three years ahead, as financial projections change so often and are difficult to do accurately. However, a reasonable projection is much better than no projection.
Also, if you’re using the business plan to seek an investment, this is great section to include details about how much money you are looking for, how long it will last you, and an exact dollar-for-dollar breakdown of how you will use the money.
A Living Document
The completion of the document is just the beginning. Now the business can do what it says it’ll do in the business plan. Since there are so many variables in the market, it is critical that the business plan is not shelved for eternity – instead, review and edit it at least once a month.