Elements of a business plan

By Charles Hopkins Published 04/7/2006 | Business and Finance

A business plan is a document that spells out your business goals and your strategies to achieve them. It also gives details of your organizational structure, the problems that you are likely to encounter, market conditions and your promotional plans. It also indicates the amount you need to expand the existing business or start a new business.

You can use charts and tables to highlight the most important financial projections. Bullets can be used to make the main points stand out. A business plan usually has about 20 to 30 pages and includes the following sections:

1. Executive summary: This is a brief, one-page statement meant for those individuals who may not have the time to read the full document. You can write this section after you have written the rest of the plan and ensure that it includes all the essential points.

2. Ownership structure and the share of each of founders: This should indicate the costs involved in starting the business and the sources of funds. If your business is already running then the plan should mention the history of the business, the legal form of the business and the past performance.

4. Description of the target segment, in terms of demographics, trends and market growth: This section should also include facts about the industry, the competition and the market forecast. 

5. Description of products or services: This section should briefly describe the products and services that you plan to sell and should give reasons why people will buy them. The cost of delivery should also be mentioned here.

6. Key members of your management team: This is the critical part of the plan. No plan, howsoever good it may be, can succeed unless the company has the right people. The manpower costs and the time frame to fill up all the posts should be indicated here.

7. Financial strategy and how it matches your growth projections: The business plan needs to include a break-even chart that will make it easy to understand the fixed costs, the variable costs and the risks involved. It should also include a projected profit and loss account, a cash flow statement and balance sheet.

8. Marketing strategy: The business plan needs to describe your strategy of focusing on specific target segments. It should include projections about your sales and the cost of sales. Specific budgets, responsibilities and dates for completion of tasks should be clearly mentioned here.

The business plan needs to address all your needs and objectives. For example, a business plan that is required to be used to support a loan application needs to address the concerns of lenders. It should mention the need for the loan, how the funds will be utilized, the repayment schedule, collateral, etc.

A good business plan needs to highlight your business priorities and the projected, month-wise cash flow. It must also include a budget with specific deadlines for completion of major work. The responsibilities too must also be clearly defined.