Business Plan Content Guide
The contents of a business plan can differ majorly, depending on the target audience. For instance, a business plan for a government grant will be much more complex than one written for a microfinance loan. However, regardless of the intended audience, all plans generally follow the same template.
1. Executive Summary
The executive summary is effectively a synopsis of the entire business plan. It should capture the essence of the business, setting out the rationale and logic behind the likelihood for its success. The style of writing should capture the reader’s attention without being overly dramatic. Typically, the section starts with an introductory paragraph or overview, after which the following headings will be discussed at a high level.
· Business Description
· Products or Services
· Market or Industry Synopsis
· Entrepreneur’s Background and Staffing Plan
· Sales History or Projections
· Funding and Expenditure
· Key Financial Indicators
2. Company Overview
The company overview is generally the shortest section in the business plan. It should include a mission statement, details of the company’s legal structure and ownership, a brief history of the business/idea, and the business location. Conclude with short term objectives, focusing on the areas such as operations, sales and revenue, marketing, and funding.
3. Products or Services
This is where the business plan begins to get meaty. Both the problem which the business is solving and the actual solution are described in detail. Identify customers’ main pain point. Address what sets your solution apart from other alternatives. Areas such as pricing, sourcing and fulfilment, and future products or services are also covered in this section.
4. Market Overview
Next, attention turns to the market. Who is the business selling to? Who are its competitors? What forces are influencing the market? How will the company build and sustain a competitive advantage? The section can be broken down into a number of sub-headings:
· Target Markets
· Market Influences e.g. social, suppliers, legal, technological, environmental
· Building a Competitive Advantage
· S.W.O.T. Analysis i.e. strengths, weaknesses, opportunities, threats
The company’s sales forecasts are outlined here. The level of complexity will vary depending on the nature of the business or the purpose of the plan. The company will need to have decided on its pricing strategy, and come-up with realistic sales targets. The forecast is typically broken down into several rows, with a row for each core product or service that you are offering. However, the sales forecast should not be overly detailed. A high level breakdown is sufficient. The section also shows the cost of sales.
6. Marketing and Promotion
Marketing is a complex discipline, however, for the most part this section will focus on the promotional elements of the marketing mix. To begin with, set out goals and objectives which the company hopes to achieve from the promotional activity. Then outline what these activities will consist of. Most modern business plans will contain a mixture of traditional and digital marketing. Budgets and timelines may also be include here.
7. Operations - Personnel and Management
Investors don’t invest in ideas, they invest in people. Can you actually accomplish what you have planned? Do you have the right team in place to turn a good idea into a great business? Here is where you answer these questions. The operations section is where the best case is made that the right team is in place to execute the business idea. It shows that the important roles and responsibilities within the business have all been carefully considered. Include brief bios of each team member with their relevant experience and education highlighted. Also make provision for future personnel requirements. Conclude with a projected payroll table.
Normally, this section will include two sets of financials at a minimum – a Profit & Loss (P&L) projection and a Cash Flow projection, and for established businesses it will require also a Balance Sheet.
The P&L is where all the numbers come together and show if the business is making a profit or loss. It pulls data from the sales forecast and personnel plan and also includes a list of all other ongoing expenses associated with running the business. The P&L also contains the all important “bottom line” where expenses are subtracted from earnings to show if the company is making a profit each month or potentially incurring some losses as it grows.
The Cash Flow statement keeps track of how much cash (money in the bank) a business has at any given point. A typical cash flow statement starts with the amount of cash the business has on hand, adds new cash received through cash sales and paid invoices, and then subtracts cash that the business has paid out as it pays bills, interest, taxes, etc. This then leaves a total cash flow (cash in minus cash out) and ending cash (starting cash + cash in – cash out = ending cash).