Your business plan sets down all the obvious components, such as the strategy, management, basic numbers, market focus, business offerings, competition, and so forth. It should indicate what your goals are and the steps the organization is taking to move along the path toward the goals. Those become concrete with dates, deadlines, task assignments, budgets, and forecasts.
When writing your business plan, you should consider that it may be read and used by parties that know nothing about your business and industry. You may one day want to provide it to a lender, investor, partner or even employee. Yet, keep your business plan short and to the point.
Following is a list of the typical sections in a business plan.
1. Table of Contents - Lists the major sections of your plan and the page numbers:
- Executive Summary
- The Business
- Products/Services Offered
- Market Analysis
- Approach to selling
- Management and Personnel
- Financial Data
- Financial assumptions
- Sources and uses of funds
- Balance sheet
- Cash flow projections
- Appendices and Supporting Documents
2. Executive Summary - A one page summary of your business plan:
- A very short history of the business
- A very short summary of the owner’s experience in the industry
- If financing is required, add:
- The amount and type of financing required
- The amount of equity (money) already invested and collateral offered
- The purpose for which the money will be used
3. The Business - Describes your business and the industry you are in:
- The current status of the business (start-up, existing, acquisition)
- The business structure (sole-proprietor, partnership, limited liability, corporation)
- Products/services your business offers
- Suppliers of your products
- What differentiates your business from you competitors
- Description of business location and hours of operation
- Short and long term goals
4. Products/Services Offered - Describes the products and/or services that your business provides, written so that a lay person can easily understand:
- A short description of products/services
- Price structure of the products/services
- Percentage of total gross sales that the products/services comprises
- Which products/services are the most profitable
- Any changes you foresee
- A list of other products/services and any special or unique features
5. Market Analysis - Demonstrate that you are knowledgeable about your business' environment:
- The Industry: (Tip: Trade associations are great sources of industry information.)
- Your specific industry
- Major trends
- Lifecycle stage of the industry (infancy, growth, decline)
- Your Customers:
- Who your customers are (individuals, small businesses, etc.)
- What their demographic makeup is (age, sex, profession, etc.)
- Market Size:
- Your market area (Example: 20 mile radius of Towson)
- Number of potential customers within your market area
- Competition - For each of your primary competitors, discuss:
- How long they've been in business
- Approximately how much business they do
- Their strengths and weaknesses
- Why customers will go to you instead of your competitor
6. Approach to Selling - How you will get these customers to purchase your products or services, describing each method of advertising:
- Short description of advertising method (flyers, radio spots, newspaper ads, etc.)
- The frequency that it will be used
- The cost of the method of advertising
- How many potential customers will be reached
7. Management and Personnel - Showcase the key members of your team and their responsibilities, including for each position:
- The position title
- The name of the person in the position
- A description of the person’s responsibilities
- A short description of the person's business background and experience
For less significant positions or positions that are not yet filled, only the position title and description are necessary. You will also want to include your team of professionals: your accountant, attorney, SBDC consultant, etc.
Tip: Organizational charts are very helpful.
8. Financial Assumption - Explains how you came up with the numbers in the following sections, validated by your research. Any category that would not be obvious to the reader should be explained. An example of this section would look like this:
- Gross Sales - Projected sales are based on (1) the average sales of four similar stores in our same market area, (2) the national average of gross sales per square foot for such stores, and (3) the independent surveys of 12 similar stores in comparable demographic areas.
- Cost of Goods Sales - The cost of goods is based on an 80% average markup on inventory.
- Payroll - Payroll expense includes a $36,000 salary for the owner ($3,000/mo.)
9. Financial Data - Discussions contained in the other sections of the plan should be reflected in the financial information.
- Sources and Uses of Funds - where the businesses funds will come from and where they will be spent
- Balance Sheet - businesses assets, liabilities, and net worth (a snapshot in time of your business's financial strength)
10. Cash Flow Projection - Shows how cash flows into and out of your business on a monthly basis. This table will be of particular interest to a financier, as it shows that your business will have the ability to make regular monthly note payments in addition to your other expenses.
11. Appendices and Supporting Documents - Any reference that was made earlier in the business plan. Such documents include:
- Extended version of tax report
- Credit history
- Listing of assets owned
- Certificates of qualification
- Documentation of cash currently held (i.e. bank statement)
- Specific market/industry research
Additional Business Plan Resources
- Business Plan Workbook - For a more detailed guide for business plan development, order "Let’s Write Your Business Plan Workbook" by Ginny L. Kuebler. The booklet is an extremely helpful Step-By-Step guide at a cost of $20, which easily integrates your ideas onto written paper. Click here to order.
- 500+ Free Sample Business Plans - Choose the category that is closest to your own business or industry, and find a plan you like. You can use these for reference in writing your own plan, or actually open it and edit it to match your business (only if you choose to purchase their software).
- Blank Business Planning Templates – SCOREs tools for new and established businesses, including financial statements.