A Business Plan Dissected
While no two business plans are (nor should they be) the same, there are some key fundamental elements to a business plan that all plans should incorporate.
Executive Summary – This is your one chance to make a first impression! This should be a brief and engaging 1-2 page synopsis of your plan, the end result of which should be engaging the reader to dig into the entire plan. Many investors read through numerous plans every week, and they often never make it past the executive summary before placing the plan in “File 13” (aka the trash). Much like the jacket cover of a book, the Executive Summary should encourage a “buy” from the reader.
Company Analysis – This section details an overview of the company, its organizational structure, a description of its products and services, and how it will bring these products or services to the market.
Industry Analysis – This is your market research: What are the trends in the industry? How big is the market? How fast is it growing? How many players are out there?
Customers & Competition – The section details who your customers will be, why they need your product or service, how it compares to others competitors’ products, and what competitive advantages you will maintain over the competition.
Marketing Plan – The marketing plan details your strategic position in the market, your product offerings, brand strategy, promotional plans, pricing, and strategic partnerships and alliances.
Design and Development Plan – This section shows how the company will be built, what departments will be needed to operate the company, what goals the company is seeking to reach, and how product or service quality will be measured and maintained.
Management Team – Many investors state that this is one of the most important (and often overlooked) sections of a plan. They place as much, if not more, value on the people running the business versus the idea itself. What are the founders’ backgrounds? Who will they be looking to bring on board? Who do they have advising them?
Financial Plan – All of the previous sections of the business plan ultimately lead to the backbone of the plan, the financial section. This should summarize the findings of your forecasted proforma financial statements, include explanations of the key assumptions of your model, analyze key variables, and briefly discuss various scenarios, such as most likely, best case and worst case. The financial plan will detail how much capital is needed, and the possible exit strategies and returns for investors.
Appendices – A full financial model, detailed market research, complex drawings, news articles and other information can be included in the appendix section. It is important to be succinct in writing a business plan and not to overwhelm the reader with too much detail. The appendix section allows certain readers the opportunity to delve into more detail, while not taking away from the focus of the main plan.