Nothing lends your new venture legitimacy like a well-written, comprehensive business plan. In fact, without one, you are unlikely to find financial backers or equity partners at all. A business plan is an essential tool that presents a benchmark for your company and provides a measuring stick against which to compare your projected plan with the actual outcome. The proper format of a business plan varies a bit depending on the industry, but there still is a general understanding of which elements should be present. Here is a framework for what you should include.
Much like a book is easier to navigate with a table of contents, so, too, does a business plan benefit from a clear roadmap. The first thing readers will see is the cover page, which should include the company logo or name, a contact person, its address and phone number and a nondisclosure statement. The statement indicates that anyone with access to the business plan agrees not to share the information inside with other people. After the cover page comes the table of contents and appendices, which also are known as supporting documents and are found in the back of the business plan.
The final opening section is the executive summary, which is an overview of the company, your plans for its success and the route to get there. This summary often is the first thing investors read, and it must be concise and well written, so plan to spend a lot of time perfecting it. You should also mention the current stage the company is in, what problems it solves in the marketplace and a brief discussion of its revenue and profit forecast.
The main section of the business plan will probably take the most time to compile, but it is vital for providing a deep dive into the proposed company and its many aspects. Here is the ideal breakdown of these categories:
- Background of company
- A brief history of the business
- A mission statement
- Company’s current status
- The concept behind the product or service
- Overview of the business objectives
- Analysis of the market
- Overall industry
- Specific segment of the market
- Sales forecast
- Major competitors
- Development of the product or service
- Research and development
- Propriety features
- Production process
- Quality assurance measures
- Backup plans
- Marketing strategies
- Survey results
- Profile of target customers
- Long-term marketing plan
- Backup plans
- Current position
- Accounts receivable and payable
- Break-even analysis
- Cost-control measures
- Financial projections
- Organizational structure
- Management qualifications and responsibilities
- Other personnel
- Directors and advisors
- Future personnel, both key and other
- Labor force predictions
- Business structure
- Current capitalization
- Future capitalization
- Exit strategies
- Royalty and licensing agreements
- Risk factors
- Unexpected market trends
- Cost overruns
- Falling short of sales projections
- Technological developments
- Other risks
This section should sum up the main factors discussed in the body of the business plan. It should include a timeline for projected funding and developments, which should be realistic but forward-looking as well.
Finally, there are a number of supporting documents – mainly financial ones – that should be included in the back. This includes basics such as photos and descriptions of the products, a production flowchart, the market analysis, press releases, financial statements, a profit-and-loss statement, key contracts and any other paperwork that supports statements or predictions mentioned in the main part of the business plan.
Clearly, a business plan is an important collection of information that may be key to the success of the company. Writers should take care to ensure the document is well written and complete. They might even want to have an attorney review it before anyone else has access.
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