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Making a Business Plan

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Now that you’ve decided it’s time to start putting a business plan together, just what should you include? While the cliché is true about no two business plans being the same, there are some basic components which need to be included.

You should approach your business plan as if you were writing it for a banker. Write the plan using the assumption that the person reading it knows nothing about you, your business, or the business environment you operate in. Also, remember that the plan is a real-time document and should be constantly updated to reflect all current information.

The following components should be included in the business plan.

Executive summary: List and briefly describe the keys to success, why the business exists and funding required, if any. Use the executive summary to give a brief description of the business and products. This should be no more than two pages in length and is usually written after the plan has been put together

Description of the business: You will need to provide a short history of the company and where you see it going in the future. This is a good section to provide vision and mission statements if you have them.

Products or services: Give a brief description of the products and/or services you are currently producing or providing. Also include any new products or services that you are looking to implement.

Market and Competitive Analysis: This section will provide an analysis of the market you are competing in and the potential that exists to expand your business within that marketplace. You will also need to include an analysis of your competitors and what possible new competition you could expect to see.

Strategy: In this section you will need to identify your competitive advantage. In other words, the advantage you have over your existing or new competitors. No business can provide the three core values, which are “price, quality and time.” You will need to decide on which of the values you will concentrate on. For example, Wal-Mart focuses on price, Fairmont Hotels concentrates on quality and McDonalds focuses on time.

Organization and Management: Every business plan needs to include a description of the business from a personnel perspective. You will need to identify key employees who are currently with the firm, and those employees whom you need to attract.

Particular attention needs to be paid to the management team. A description of the educational and business background of managers should be included, along with their roles. Again, any management personnel that you will be looking to attract also need to be listed.

The goal is to show that you have the people in place to effectively run the business in the future.

Financial: While this section is usually kept for the last section of the business plan, it is undoubtedly the most important. Unfortunately, if the business isn’t going to make money, there’s no use in continuing with the business.

Another reason why this section is put at the end of the business plan is because most bankers and financiers tend to go right to the financials. It is not unusual to have your banker tear the financial out of the plan and focus on this section. If this section looks good they will then spend time going over the rest of your plan.

Don’t be discouraged if this task seems onerous. You won’t complete your first business plan overnight and it will take a significant amount of time to complete. However, there are some very good business plan software packages available which make will the project easier, faster and give it a professional look. 

Myron Gordon owns TMSG Management Services Group, which provides management and financial services to growing businesses.

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