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The Business Plan
A business plan does not have to be lengthy to be effective. All business plans include certain key elements, which address the important issues in most business start-ups or expansion/improvements. If these basic elements are included in the plan, in an articulate and concise manner, then the plan has a chance to succeed. The length of the plan is unimportant--content is. Be sure to indicate early in the plan why the plan is being presented. If you are seeking money, say so and state the amount and the general purpose. Do not keep the reader in suspense as to why they are spending their valuable time reading your document.
The following are the key elements in any Business Plan. These elements are not chiseled in granite and can, of course, be altered for specific situations. The order in which they appear can also be altered with one exception--the first element--the introduction or executive summary.
The elements are as follows:
I. The Introduction (Executive Summary)
Should include a brief business history/profile, a sketch of the principals (resumes can be included in the appendix) and the purpose of the plan.
II. Product
What does the business sell, produce or service or expect to sell, produce or service? And perhaps a bit of comment on why it is unique--if it is unique.
III. Competition
Who else is doing what you are doing, or planning to do? How are you similar and how are you different? A clear understanding of your rivals indicates to your reader that you have researched and analyzed your industry.
IV. Target Market Segment
Who is going to buy your product, where are they located and why will they buy from you? How will you attract them in your direction? The more clearly you can define your market segment the more precisely you can tailor your approach.
V. Amount of Financing Needed
Precisely state the amount of financing needed.
VI. Uses of Financing
How will the money be used? What equipment will be purchased? What level of salaries will be paid? What amount of inventory will be stocked? Be sure to include an amount for contingencies. Detail in this section is appreciated.
VII. Financial Projections
A pro-forma cash flow/profit and loss is necessary. A 12 month detailed statement is best with gross figures (i.e., sales, gross margin, gross profit, net profit) extended out for two or three years. Be sure to include supporting notes concerning sales estimates and expenses. The figures presented will have to be defended to the reader.
VIII. Personal Financial Statements
A statement of net worth (i.e., balance sheet) will more than likely be needed for each of the key players in the firm. Most investors will require a personal pledge from the business partners before committing their funds. The firm's partners will need to obtain the proper documents from their personal accountant or financial advisor.
IX. Appendix
Should include any supporting documents, which are cited in the body of the plan. This can include resumes, samples of the described product, or legal documents validating collateral for the financing.
To re-emphasize, when compiling a Business Plan there is no substitute for accuracy, clarity and conciseness. Include all that is needed but only what is needed.
Next section: Tips for Putting Your Plan Together