Drafting a business plan
- January 27, 2011
The business plan is a vital document for new and existing businesses. A well-crafted business plan will help owners reach their goals and identify problems that may arise. Business plans typically are required when business owners seek money through bank loans or angel investors. Even if business plans are used only as internal documents, they will help a business owner stay organized and recognize areas that need improvement. Business plans also are living documents that should be updated. Business plans should include the following elements:
- Executive summary: This is a snapshot of your company. Include your mission statement, brief company history, description of your product or service and future plans for the company.
- Market analysis: This is your chance to show off your knowledge of your industry. Describe recent industry trends and your target market. Provide in-depth analysis of competitors. Evaluate their strengths and weaknesses and current market share. You also should describe key barriers to entry for your business, including any government regulations that may affect your business.
- Business description/products and services: Now is the time to put the spotlight on your product or service. Explain what your product or service does and the marketplace need your business plan fits. Discuss manufacturing processes and any copyright, if applicable, or trademark information that would relate to your business.
- Marketing strategy: Here you should discuss how you plan to market and sell your product. Include your overall marketing strategy, product price points and prospective customers. If you have a new business, you should include information on how you plan to enter the market.
- Organization and management: Now you are getting into the nuts and bolts of your business. You should include your business structure (LLC, partnership, sole proprietorship or corporation) and ownership. You also should provide biographies of owners and key management. Create a chart documenting your business structure and describe qualifications for a company board of directors, if applicable. You should also list your current and anticipated staffing needs.
- Finances: If you have an existing business, this section should include financial statements from the past few years. Lenders also will want to see where you believe the company is headed financially. Show forecasted financial statements and cash flow positions. If you are requesting money, you should use a section here to describe in detail your current and future financial needs and how you would spend the additional money. You also should include the type of funding you are requesting and its repayment terms.