Business Plans

Business plans are used by both new and established companies. Someone who is planning to start a company in the near future might need a business plan to show to banks or potential investors. Established companies may need business plans that outline a strategy for introducing a new product, increasing profits, or expanding the company. When writing a business plan, one of the first things you should do is find a good template (these are readily available online). Although there are numerous variations, most business plans contain the following sections:

Executive summary: Even though the recommended maximum length of this section is only two pages, it is usually considered the most important part of the business plan. The executive summary is basically an abstract of the entire report. Here you'll give the reader a quick overview of the business and why the strategy outlined within the report is likely to be a success. You'll be taking the most important information from each of the sections below, so write the executive summary last.

General company description: In this section you'll describe the business itself. Include relevant information like the business's mission statement, goals and objectives, company strengths, and the legal form of ownership.

Products and services: Here you'll describe precisely what the business owner plans to sell to consumers. Aside from explaining the products and services offered, you should also touch on competitive advantages and disadvantages and the methods that will be used to set prices or fees.

Marketing plan: No business will be successful without effective marketing. In this section, you'll analyze the competition. You should also describe the target demographic and the methods that will be used to reach this group, whether it's trade shows, word of mouth, or online advertisements.

Operational plan: Explain how the business will operate. This section will include a description of production methods, the company's location, business jobs, legal requirements, and important personnel.

Management and organization: In this section, you'll discuss the company's key employees and individuals who will be instrumental in running the business. Individuals who may provide professional and advisory support (accountants, a board of directors, etc.) should also be identified.

Personal financial statement: Include the financial statements of owners and any major shareholders to show banks and investors that funds to start up the business are available.

Start-up expenses and capitalization: You'll need to identify the costs that will be involved in starting up the business and describe exactly how the business owner plans to secure these funds.

Financial plan: In this section, you will develop a one-year profit and loss projection. You will need to identify sources you used and any assumptions that were made in calculating business insurance, cash flow and figures. A cash flow projection is also typically included in this section, and some clients might ask you to prepare a projection of how the company will perform during the four years after its start-up.

Quick tip: If you're using statistics or figures to support your statements, be sure to cite them and use high quality sources. Banks and investors will need proof that your statements are based on solid facts and not just wishful thinking.

Last Updated: 09/18/2014