7 essential parts of a business plan
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The task can seem overwhelming, but writing a business plan is an important step in
helping your company launch, grow, and thrive. Business plans provide vision and a
clear strategy. They’re also critical for businesses seeking funding. But where should
you start, and what should you include?
Like most daunting projects, drafting a business plan is best done step by step. While
plans vary as much as businesses do, here's a summary of the seven main sections of
a business plan and what each should include.
1. Executive Summary
The first section should be a concise overview of your business plan. It should be short,
and must be well written. Your goal is to draw readers in so they want to learn more
about your company.
Though this section appears first, consider writing it last, after you've worked out the
details of your plan and can summarize your thoughts succinctly and accurately.
The executive summary for a business plan should include:
Your business name and location
Products and/or services offered
Mission and vision statements
The specific purpose of the plan (to secure investors, set strategies, etc.)
Related: How to Create Mission and Vision Statements for Your Business
2. Company Description
This high-level view of your business should explain who you are, how you operate and
what your goals are.
The company description should feature:
The legal structure of your business (corporation, sole proprietorship, etc.)
A brief history, the nature of your business, and the needs or demands you plan
to supply
An overview of your products/services, customers, and suppliers
A summary of company growth, including financial or market highlights
A summary of your short- and long-term business goals, and how you plan to
make a profit
Related: How to Choose the Right Business Structure
3. Products and Services
Clearly describe what you’re selling, with a focus on customer benefits.
Include details about suppliers, product or service costs, and the net revenue expected
from the sale of those products or services. Consider adding pictures or diagrams.
In general, this section should include:
A detailed description of your product/service that emphasizes customer benefits
An explanation of the market role of your product/service and advantages it has
over competitors
Information about the product/service's life cycle
Relevant copyright, patent, or trade secret data
Research and development activities that may lead to new products and services
Related: How to Improve Your Business Communication Skills
4. Market analysis:
Show your industry knowledge, and present conclusions based on thorough market
research. Place detailed findings of any studies in an appendix.
Your market analysis should include:
A sketch of targeted customer segments, including size and demographics of
each group
An industry description and outlook, including statistics
Historical, current and projected marketing data for your product/services
A detailed evaluation of your competitors, highlighting their strengths and
weaknesses
Related: 5 Keys to Market Research Success
5. Strategy and Implementation:
Summarize your sales and marketing strategy, and how you’ll implement them with an
operating plan.
This section should include:
An explanation of how you’ll promote your business to customers and enter the
market
Details about costs, pricing, promotions, and distribution/logistics
An explanation of how the company will function, including the operations cycle
(from acquisition of supplies through production to delivery)
Information on sources of labor and number of employees
Data on operating hours and facilities
Related: Online vs. Offline Marketing—Which is Better for Your Small Business?
Related: How to Market Your Business for $1,000 or Less
6. Organization and Management Team:
Outline your company's organizational structure. Identify the owners, management team
and board of directors.
Include the following:
An organizational chart with descriptions of departments and key employees
Information about owners, including their names, percentage of ownership,
extent of involvement within the company and a biography listing their
background and skills
Profiles of your management team, including their names, positions, main
responsibilities and past experience
List of any advisors, such as board members, accountants, and attorneys
Related: 3 HR Tasks that are Critical to Your Small Business
7. Financial plan and projections:
This last section of your business plan should be developed with a professional
accountant after you've completed a market analysis and set goals for your company.
Some of the important financial statements that should be part of your plan include:
Historical financial data (if you own an established business), including income
statements, balance sheets and cash flow statements for the past three to five
years
Realistic prospective financial information, including forecasted income
statements, balance sheets, cash flow statements and capital expenditure
budgets for the next five years
A brief analysis of your financial data, featuring a ratio and trend analysis for all
financial statements
