Elements Of A Business Plan

What goes in a business plan? The body can be divided into four distinct sections: 

1) Description of the business 
2) Marketing 
3) Finances 
4) Management 

In developing your business plan, your addenda should include an executive summary, supporting documents, and financial projections. 

Although there is no single business plan formula, some elements are common to all business plans. These elements would include: 

Elements of a Business Plan

1. Cover sheet 
2. Introduction 
3. Table of contents 

The Business 
A. Description of business - Products, Services, and Markets
B. Marketing 
C. Competition 
D. Operating procedures 
E. Personnel 
F. Business insurance 

Financial Data 
A. Loan applications 
B. Capital equipment and supply list 
C. Balance sheet 
D. Breakeven analysis 
E. Pro-forma income projections (profit & loss statements) 
   Three-year summary 
   Detail by month, first year 
   Detail by quarters, second and third years 
   Assumptions upon which projections were based 
F. Pro-forma cash flow 

Business Plan Introduction/Mission

The introductory section of your business plan should include:

• A detailed description of the business and its goals.
• The ownership of the business and its goals.
• Your professional skills and experience
• Your advantages in the marketplace 

Products/Services and Markets

In this section, you must describe your products and/or services and:

• Identify the consumer demand for your service
• How your service is different - differentiation between you and your competitors.  If you are not different, this also needs to be stated.
• Market demographics - Identify your market, as well as its size and locations.
• Where and how you plan to market your services
• Pricing and price strategy

Financial Management

The financial management section should include:

• The source and amount of your initial capital as well as identify obligations of the capital (loan repayments or equity stake)
• Develop a monthly operations budget for the first year.
• Predict and back up your expected ROI (return on investment and a monthly cash flow statement for the first year.
• Income statements and balance sheets for the first 3 years
• Identify your break-even point
• How and how much will you and other owners be compensated
• Bookkeeping methods
• Develop financial risk analysis.  What happens if various anticipated events do not occur?

Operations

The operations section will explain:

• How business is managed on a day to day basis.
• Personnel procedures
• Contracts and significant agreements such as suppliers, rent, etc.
• Detail information about equipment costs such as vehicles
• Detail information about how services will be delivered

Concluding Statement

Summarize your business goals and business plan, and also discuss your commitment to the business and following the business plan that you have laid out.  Discuss how and what events might trigger changes in the business plan.

Now that you have a completed business plan, review it and take criticism from friends.  It is not important for you to defend yourself.  If an honest friend sees a problem, then they see a problem.  Consider whether it is a fault of the the business plan itself, or if there could be a problem in the way that you may have explained yourself.

Supporting Documents 

• Tax returns of principals for last three years Personal financial statement (all banks have these forms) 
• For franchised businesses, a copy of franchise contract and all supporting documents provided by the franchisor 
• Copy of proposed lease or purchase agreement for building space 
• Copy of licenses and other legal documents 
• Copy of resumes of all principals 
• Copies of letters of intent from suppliers, etc. 

 Marketing >> Small Business Plans  >> Business plan elements