A business plan is a vital, living document that has multiple uses for a business. It can be used to secure financing, as an operating guide, or just as a way to thoroughly think through a business idea before venturing off unprepared. A typical business plan has 6 main sections which include the following:
(1) Executive Summary – This is generally a 1 to 2 page section that summarizes everything about your business. Specifically, the executive summary states what type of business you have (retail, service, etc.), the legal entity of the business (LLC, sole proprietorship, S-Corp., etc.), who will manage the business, where the business will be located, what makes the business unique, projected sales (gross profit as well as net profit) for the next 2 to 3 years, and any request for funding.
(2) The Business Description – This section details out the type of business, what products or services will be offered, the operating hours of the business, the business’s history, a mission and vision for the business as well as goals and milestones.
(3) The Marketing Plan – This sections describes who your competition is, how you differ from the competition, who your target customer is (age, gender, income level, education level, location, etc.), your pricing strategy (budget vs. high quality), how large your potential market is and if it is a growing or shrinking industry, how much of that market share you plan to acquire, and how you plan to advertise your business (radio, TV, internet, etc.).
(4) The Management Plan – This part of the business plan details who will own the business, who will manage it, what experience is necessary to manage the business, who will be the legal counsel or accountant for the business, and job descriptions with wages of current or future employees.
(5) The Financial Plan – An income statement, a balance sheet, and a cash flow statement are typically found in this section of the business plan. These statements are usually projected for 3 years into the future for a start-up company, whereas an existing company may show the past 2 years financials along with the projections for the next year or two years in the financial plan section of their business plan. Additionally, there is generally an “assumptions” page or an explanation of the financials so that the reader understands how the numbers were calculated.
(6) Appendix – This section can be used to add any supporting documentation that you used for your business plan. It could include a blueprint of your proposed building expansion, a demographic report you used to help identify your target market, a report from an industry journal stating how the market is growing or shrinking, or even a detailed list of equipment with prices that you plan to purchase.
Additionally, your business plan should have a cover page with your business name, your contact information and the date of the plan, as well as a table of contents.