Elements of a Business Plan
There are seven major sections of a business plan, and each one is a complex document. Read this selection from our business plan tutorial to fully understand these components.
Post Comment |
Now that you understand why you need a business plan and you've spent some time doing your homework gathering the information you need to create one, it's time to roll up your sleeves and get everything down on paper. The following pages will describe in detail the seven essential sections of a business plan: what you should include, what you shouldn't include, how to work the numbers and additional resources you can turn to for help. With that in mind, jump right in.
Within the overall outline of the business plan, the executive summary will follow the title page. The summary should tell the reader what you want. This is very important. All too often, what the business owner desires is buried on page eight. Clearly state what you're asking for in the summary.
The statement should be kept short and businesslike, probably no more than half a page. It could be longer, depending on how complicated the use of funds may be, but the summary of a business plan, like the summary of a loan application, is generally no longer than one page. Within that space, you'll need to provide a synopsis of your entire business plan. Key elements that should be included are:
1. Business concept. Describes the business, its product and the market it will serve. It should point out just exactly what will be sold, to whom and why the business will hold a competitive advantage.
2. Financial features. Highlights the important financial points of the business including sales, profits, cash flows and return on investment.
3. Financial requirements. Clearly states the capital needed to start the business and to expand. It should detail how the capital will be used, and the equity, if any, that will be provided for funding. If the loan for initial capital will be based on security instead of equity, you should also specify the source of collateral.
4. Current business position. Furnishes relevant information about the company, its legal form of operation, when it was formed, the principal owners and key personnel.
5. Major achievements. Details any developments within the company that are essential to the success of the business. Major achievements include items like patents, prototypes, location of a facility, any crucial contracts that need to be in place for product development, or results from any test marketing that has been conducted.
When writing your statement of purpose, don't waste words. If the statement of purpose is eight pages, nobody's going to read it because it'll be very clear that the business, no matter what its merits, won't be a good investment because the principals are indecisive and don't really know what they want. Make it easy for the reader to realize at first glance both your needs and capabilities.
Read more: http://www.entrepreneur.com/article/38308#ixzz2Y0450dNL
5 Features of Great Business Plan Software
Using business plan software might be just what you need to help you write a business plan. It will save you time and the headaches that come with trying to figure it all out yourself. Here are some features of great business plan software that you should look for when making a purchase:
1. Step-by-Step Instructions
Writing a business plan or coming up with a business plan outline can be intimidating for some. It's a lot easier when you're given easy to follow step-by-step instructions, and a great business plan software will do just that. In addition to the instructions, you'll get expert advice to help you think through problems and solutions that your business will face.
2. Large Number of Sample Business Plans
There's nothing like having sample business plans to look at to help craft your own. A good software program will have so many that you're bound to find a company just like yours (or close to it). This will make it easier for you to come up with your own business plan outline, because you can copy it and modify it to fit your business. This will save you time, and it may help generate ideas that you did not think of yourself.
3. Cash Flow Management
One of the most important aspects of writing a business plan are your financial statements. Some business plan software makes it easy for you to create cash flow statements and to see how they're affected by changes to your business plan. For example, after you plug in data concerning your accounts payable and accounts receivable, you might want to test how your cash flow will look if you dropped a particular product or service. Your software should be capable of reflecting the changes in the numbers without having to redo your business plan all over again. It should also have a chart for you to see the effects visually. This makes writing a business plan easier than trying to craft it yourself in Excel or doing the calculations on paper.
4. Customization Tools
You may need to customize the software in order to meet special financing or other requirements. A great feature of a business plan program is the customization tools available. These allow you to insert anything extra that you need, such as tables or fields. If you started your business plan using Excel or another spreadsheet, many good business plan software programs will allow you to import that data into the program. This allows for the flexibility needed in writing a business plan.
5. Plan Versus Reality
Perhaps one of the most helpful features is the ability to compare (at a glance) how your business is really doing versus what your written business plan says. Some will have comparison charts available so that you can readily see if you're meeting your financial, sales, marketing and other goals, or if you're missing the mark. This is important because you want to correct mistakes or change courses quickly, before you suffer unnecessary losses to your business. Without a comparison of your plans versus reality, you might follow a plan that will cause your business to fail.
The beauty of using a business plan software is that as your business grows, you can easily adjust your plans with simple data entry. The software will write your business plan all over again, and you won't need to get bogged down with recalculating everything.
The general headings for any business plan should include the following:
Business Plan Title
• Executive Summary
o Keys to Success
• Company Summary
o Company Ownership
o location(s) and facilities
• Start-up Summary
o Start-Up Costs
o Funding Investment
• Products and Services
o Service Description
o Future Services
o Product description
o Future Products
• Market Analysis Summary
o Market Segmentation
o Target Market Segment Strategy
o Market Trends
o Service Business Analysis
o Buying Patterns
• Strategy and Implementation Summary
o Swot Analysis
o Marketing Strategy
o Pricing Strategy
o Promotion Strategy
o Business Competitive Edge
o Web Strategy
o Sales Strategy
• Management Summary
o Management Team
o Organizational Structure
o Personnel Plan
• Financial Plan
o Break Even Analysis
o Profit and Loss
o Cash Flow