So you need money to expand your business, or to get it off the ground in the first place. If someone is going to invest in you and your idea, you’re going to have to show them that you know what you need… and that’s where a business plan comes in to play.
A business plan is simply an informational packet, detailing the various parts of your company, your competition, and your financial needs. While it does cover a lot of ground and requires a bit of research, the business plan is also one of the best ways to impress potential investors and show them that their money isn’t going to be wasted if they invest it in you.
What follows is a list of the most common elements of a business plan, along with a brief description of what should be included within each. The order that they’re presented in is only a suggestion, as each business may have unique needs and goals which require information to be presented in a different order. Add to these items if you wish, remove them if you must… after all, it’s your business.
1) Executive Summary: This needs to be the first part of your business plan, but it also needs to be written last. Your executive summary should be a 1-2 page overview of your plan as a whole; cover everything, but don’t go too in-depth on any one item. You have the entire rest of the plan to expand on any topic.
2) Industry Analysis: Another overview, the industry analysis presents the various industry-wide trends, competition, and opportunities that your business will face.
3) Market Analysis: Like a more local version of the industry analysis, present an overview of local and regional competition, trends, and opportunities. Go a bit deeper into your explainations, as the items in the market analysis will directly affect your business.
4) Business Description: Present all of the necessary information about your business, including how long it’s been in operation (or whether it’s a start-up), the legal structure of the business, who the owners are, current needs, and the short and long term goals that you have. Make your business look as good as possible, but be careful not to present false information or to ignore any shortcomings that you may have.
5) Competition: Going back to the local competition from your market analysis (as well as any major industry-wide competition from your industry analysis), show as best you can your competition’s strengths and weaknesses. This is also where you should respond with your company’s strengths, showing how you’ll be able to perform better than your nearest competition.
6) Marketing Plan: This is where you show your potential investors that their money will be able to make a good return. Show any current customers (as well as potential customers), and also illustrate the draw that your company has to those customers. Present a detailed explaination of your pricing, distribution, and promotion strategies (making sure to avoid any overly-technical terms, so as not to confound investors who aren’t familiar with your industry.)
7) Operations: This section is most important if you’re in a manufacturing industry, since this is where you’ll need to describe specific equipment and processes that your company uses. The operations section is also where you describe the structure of your business itself, including how it is run, any departments that it has, and any plans for expansion that you might have.
8) Organization: Here you should provide information on the organization of your company, including the backgrounds of your top managers. You should also include organizational charts and details about adding and removing staff members.
9) Funding Needs: Be specific. List the total amount that you need, making sure that it’s the bare minimum that you can get by with, and show how that money will be used. You should also explain why your allocation of funds is the best way to use the money, since investors always want to make sure that they’re getting the most for their dollar.
10) Financial Statements: If you’re writing your business plan for an already existing company, you should include income statements and balance sheets for the past several years. You should also include projections for the next 5 years for any business, even a start up, breaking the sales and cash flow projections into monthly incriments for the first 3 years, and then quarterly for the next 2.
11) Appendix: As the end of the buisiness plan, you should include an appendix containing all references, recent statistics, and additional information that was not covered in the overall plan.
A well-organized business plan can show potential investors that you’ve really researched your position in the marketplace, and can help to make them feel much more comfortable with trusting you to bring them a return on their money.