The Components of a Business Plan

New small business owners expect that they will need to pour time, energy, and financial resources into building their new business. Unfortunate, many do not focus the same amount of energy into building a solid business plan. The business plan should be the foundation of your business. Just as in building a house if the foundation is not rock solid your business may slowly fall apart. On the other hand, if you spend the time and mental energy needed that foundation will be strong enough to keep your business strong for many years to come.

At the same time a business plan needs to be a dynamic entity that is referenced frequently and changed as your business evolves. So what are the crucial aspects of a business plan? Each business is unique and as such all business plans will be distinctive; with emphasis on the aspects of the plan that will be essential for that business. Every business plan should have a similar outline with the following sections:

1. Executive Summary

This section should be your sales pitch. As such it will be a short, less than two pages, description of your company and get the reader interested in finding out more about your business.

2. Business Description & Vision

This segment has several components that give a much more detailed description of your business and your long-term goals. It should include a mission statement where the purpose of the business is outlines. It will contain a discussion about the company vision for growth along with the short and long term goals and objective. In addition, give the readers a brief history of the business and the names and titles of the owners or members of the company.

3. Definition of the Market

This portion of the business plan gets into the detail of why you believe your business will thrive in the current market place. You should describe the industry outlook for similar companies and the needs of the existing market. In this section layout your target market along with your expected clients or customer base.

4. Description of Products and Services

Previously in your business plan you have given a brief description of the products or service you plan to offer. In this segment give further detail about those products and services, and why you believe they should have a competitive edge in the current market. Use pictures or brochure if available.

5. Organization & Management

Now you get to show how your business is structured. Include in this section your management structure along with your legal structure. Give a brief description of the various positions within the company and how those positions will be filled.

6. Marketing and Sales Strategy

In this segment explain your sales strategy. Be specific to pricing, promotion, products and place. How will you accomplish your vision? How will you obtain and build upon a significant market share?

7. Financial Management

This section contains the essential information that investors and loan providers will want to examine before providing funding. Include:

Estimate of start-up costs
Projected balance sheet (1 year forward)
Projected income statement (1 year forward)
Projected cash flow statement (12 months forward)

So now you have a solid business plan, how do you use this plan to benefit your business? To be continued…..