Writing your Business Plan
What should be included in a business plan?
Although business plans vary in terms of length and scope, all successful business plans contain common elements. Here are the ones that should be included in any business plan.
The Executive Summary (Business Description)
The executive summary is an overview of the key points contained in your business plan and is often considered the most important section. Positioned at the front of the plan, it is usually the first section that a potential investor or lender will read, and may well be the only section to be read, if it is not properly prepared. This important summary should:
- Include highlights from each of the other sections to explain the basics of your business
- Be sufficiently interesting to motivate the reader to continue reading the rest of your business plan
- Be short and concise - no more than two pages long
Although the executive summary is the first section of the plan, you should write it last.
Identifying your Business Opportunity
This section of your business plan must clearly describe what your business is all about, that is, its products and/or services, and your vision for the business. It should include:
- Who you are
- What you do
- What you have to offer
- The market you want to address
Remember that the person reading the plan may not understand your business and its products, services or processes as well as you do; so, try to avoid jargon. It's a good idea to get someone who is not involved in the business to read this section of your plan to make sure they can understand it.
You should indicate:
- If this is a new business venture, the purchase of an existing business or the expansion of an existing business
- The industry sector your business is in
- The uniqueness of your product or service
- The advantages your business has over your competition
- The vision and main objectives of your business
- Your legal business structure (sole proprietorship, partnership, corporation)
Also include the date the business was registered/incorporated, the name of the business, its address and all contact information.
Marketing and Sales Strategy of a Business Plan
This section of your business plan should describe the specific activities you intend to use to promote and sell your product or service. A strong sales and marketing section demonstrates you have a clear idea of how you will get your product or service to market and should answer the following questions for the reader:
- Who are your customers? Do some research and include details of customers who have shown an interest in your product or service. Describe how you are going to promote yourself to potential customers to let them know your business exist.
- How are you going to reach your customers? You should know your customers and the best method by which to reach them. Research will help you identify the most effective way to reach your selected audience, whether it is through the Internet, over the telephone or by in-person contact.
- Who is your competition? Once you understand who your competition is, you need to research their strengths and weaknesses, and use this information to assess potential opportunities and threats to your business.
- How are you going to position your product or service? Describe what makes your product or service unique to the market you are trying to break into.
- How are you going to price your product or service? Outline your pricing strategy, including incentives, bulk pricing, loyalty incentives and/or group sales.
To learn more about effective marketing and promotion techniques, see these documents:
- Marketing basics
Brush up on key marketing concepts, learn how to develop a marketing plan, and assess strategic marketing options for your company.
- Promoting and advertising your business
Learn how to use advertising and other promotional techniques effectively.
This section addresses the people working in your business and how you plan to manage your business. Include:
- A brief organizational layout or chart of the business;
- Biographies of the managers (including yourself)
- Who does what, with a brief job description of each position
- The needed skills of each position
- Any other relevant information related to personnel
Don't underestimate the importance of this part of your plan. Investors need to know that you and your staff have the necessary balance of skills, drive and experience to enable your business to succeed. It is also advisable to outline any recruitment or training plans, including time scales and costs.
This section of your business plan should outline your operational requirements, including your day-to-day requirements, facility requirements, management information systems and information technology requirements, and any planned improvements.
Things to include:
- Day-to-day operations - provide a general description of the day-to-day operations of the business, such as hours of operation, days open, seasonality of business, suppliers and their credit terms, and so on.
- Facility requirements - identify your requirements in terms of size and location. Include any related documents in the appendix of your business plan, such as lease agreements or supplier quotations. Detail any special requirements associated with the facility and include any licensing documentation in your appendix.
- Management information systems - indicate how you plan to control stock, manage accounts, control quality and track your customers.
- Information technology (IT) requirements - identify the IT systems you will be using for your business. As this is a key factor for most businesses, indicate if you are using a consultant or IT support service and outline any planned IT developments.
- Management and Operations
- E-Business - Programs and resources to help you do business over the Internet.
Financial Forecasts of a Business Plan
This section of your business plan essentially turns your plans into numbers. As part of any business plan, you will need to provide financial projections for your business. Your forecasts should run for the next three to five years. However, the first 12 months' forecasts should have the most details, including assumptions both in terms of costs and revenues, so investors can clearly see your thinking behind the numbers.
Your financial forecasts should include:
- Cash flow statements - this is a cash balance and monthly cash flow pattern for the first 12-18 months. It includes working capital, salaries and sales
- Profit and loss forecast - this is the level of profit you expect to make, given your projected sales, the costs of providing goods and services, and your overhead costs
- Sales forecast - this is the amount of money you expect from sales of your product and/or service
Things to consider:
- How much capital do you need, if you are seeking external funding?
- What security can you offer to lenders?
- How do you plan to repay any borrowings?
- What are your sources of revenue and income?
- Forecasts should cover a range of scenarios.
- Review risks and develop contingency plans to offset the risks.
- Review industry benchmarks/averages for your type of business.
- Managing your finances
Resources to help you understand financial concepts and learn about tasks like budgeting, financial analysis and bookkeeping.
- SME Benchmarking Tool
Find out how your firm measures up to comparable small businesses within your industry.
Other Useful Information
The following sections are not always required, but will certainly enhance any business plan:
- Implementation Plan - this section lists estimated dates of completion for different aspects of your business plan, targets for your business and milestones.
- Appendices - these should include different supporting materials, such as any licences and permits, agreements, contracts and other documentation that support your business plan.