Ideas Blog

Business Plan Sections

Business plans can range from very simple to very complex documents, depending on their intended use.  For raising funds from friends and family, the plan may be simplistic.  However, when seeking funding form accredited investors, angel funds or venture capital firms, business plans require a much greater amount of detail.  No matter its intended use, the basic sections of any business plans contain at least the following:

Business Overview

A description business.

  • Business name
  • Location
  • Legal business description (i.e. proprietorship, limited liability, corporation, and so forth)
  • Business status (new, expanding, franchise
  • Industry
  • Business purpose and goals
  • If an existing business, provide history of operations, revenue, profits, etc.

Market Analysis

This section should illustrate your knowledge about the particular industry your business is in, which should include among others:

  • Industry description and outlook
    • Description of your primary industry
    • The current size of the industry as well as its historic growth rate, trends and characteristics related to the industry as a whole
    • Major customer groups within the industry (i.e., businesses, governments, consumers, etc.)
  • Target market information
    • When you are defining your target market, it is important to narrow it to a manageable size
    • Distinguishing characteristics of the major/primary market you are targeting
    • This section might include information about the critical needs of your potential customers, the degree to which those needs are (or are not) currently being met, and the demographics of the group
    • You need to know the number of potential customers in your primary market, the number of annual purchases they make in products or services similar to your own, the geographic area they reside in, and the forecasted market growth for this group
    • The extent to which you feel you will be able to gain market share and the reasons why
    • Define the levels of your pricing, your gross margin levels, and any discount structures that you plan to set up for your business
    • Trends and potential changes which may impact your primary target market, along with key characteristics of your secondary markets
  • Evaluation of the competition
    • When doing a competitive analysis, identify the competition by product line or service as well as by market segment; assess their strengths and weaknesses; determine how important your target market is to your competitors; and describe any barriers that may hinder market entry
    • Note all key competitors for each of your products or services and for each key competitor, determine what their market share is and then try to estimate how long it will take before new competitors will enter into the marketplace
    • Weaknesses:  analyze the same areas as you did before to determine what your competitors’ weaknesses are

Marketing and Sales

Successful marketing can make or break any business. When developing your sales and marketing, consider the following:

  • Marketing Plan
    • Who are the primary customers and how you will sell to them
    • Market penetration strategy
    • Growth strategy
    • Channels of distribution strategy—choices for distribution channels could include original equipment manufacturers (OEMs), an internal sales force, distributors, or retailers
    • Communication strategy—generally, a combination of the following tactics works the best:  promotions, social, advertising, public relations, personal selling, and printed/electronic materials such as brochures, catalogs, flyers, etc.

After you have developed a comprehensive marketing strategy, you can then define your sales strategy. This covers how you plan to actually sell your product.

  • Sales strategy
    • Sales force strategy. If you are going to have a sales force, do you plan to use internal or independent representatives?  How many salespeople will you recruit for your sales force?  How will you structure their compensation in order to drive the crucial results that you want ?
    • Compensation plans for sale personnel
    • Sales activities/tactics and objectives

Employees, Operations and Locations

It is important to provide detailed information about your business. This includes information on:

  • Employees
    • Number of employees and managers
    • Job descriptions
    • Required business departments and working hours required to run a smooth operation
  • Operations
    • List products and services offered
    • How the will be offer and what equipment and furniture will be required to operate smoothly
  • Location
    • Location of your business
    • Explain any renovations, new buildings, machinery, systems that are required.
    • If applicable, address any zoning laws and licenses that are required for business operation

Financial Projections

Even if the object is not to raise money from outside investors, a financial plan should include the following, at a very minimum:

  • Detailed by month, one-year profit and loss statement
  • Detailed by year, five-year profit and loss statement
  • Start-up capital needs, sources and uses of the cash
  • Balance sheet and cash flow statement
  • Detailed notes as required to explain aspects of the financial documents