For any entrepreneur seeking to start up a business, getting a business plan is an essential step that requires time and dedication to produce. Getting the business plan right will probably determine the direction and potentially, the success of the new business endeavor. Before delving into the usually intimidating task of developing a business, it is very important to know what information a business plan must contain and how it should be arranged. Here are 7 sections a standard business plan must contain and what each section must address.
- Executive Summary: This section should give a concise but interesting overview of the contents such that you attract interest of anyone reading without getting him or her bored. For some people, writing this section comes after they have completed the whole document and have fine-tuned the details. For others, it comes first. Whatever the case, it must contain the name and address of the business, products and services offered, mission and vision statements and purpose of the plan.
- Company Description: This section describes the business in a broad sense, explaining what it does and how it does it. It should contain the nature of the business, an overview of its products, suppliers and target audience. A summary of financial or market highlights, short- and long-term business goals, and how the business will make a profit should be included.
- Product and/or Service description: One of the main reasons of writing a business plan is to understand how the business will provide a better alternative to what is already existing. This section should provide this information in a succinct manner. Include information about the product/service’s life cycle and advantages your product/service has over its competitors.
- Market Analysis: This is one of the most important parts of your plan. It is also the most tedious to come up with. It requires market research indicating a sketch of targeted customer segments, including size and demographics, historical, current and projected marketing data for your product/services as well as performance of competitors. It should contain realistic prospective financial information, including forecasted income statements, balance sheets, cash flow statements and capital expenditure budgets for the next five years. You most likely will need a professional accountant for this.
- Marketing Strategy: This explains how the business plans on taking the products or services to the doorsteps of the consumers. Market entry, costing, pricing strategy and operational cycles should be addressed thoroughly in this section. If possible and applicable, detail production hours and requirements. If seasonal variations will affect the business, indicate this in the plan.
- SWOT Analysis: Although some debate exists as to whether to separate this as a section or to include it in the market analysis, we recommend developing a separate section. This allows readers to understand clearly how the business plans to overcome possible constraints.
- Management Structure: Provide a clear description of the business organizational structure, the owners, management team and board of directors, if applicable as well as the potential scope of responsibilities of each member.