Parts of Business Plan and Definition
The parts of business plan and definition refer to the governing document of your company and the elements it should include.3 min read
The parts of business plan and definition refer to the governing document of your company and the elements it should include. The business plan thoroughly describes your company's purpose, structure, and goals for potential partners, stakeholders, and investors.
Purpose of a Business Plan
Your business plan will be informed by the specific goals for your business. The more complex your product or service, the more complex and detailed your business plan must be. If you are using the business plan to seek investors, you'll need to provide a thorough explanation of your concept and how it fits into your industry.
Once you've drafted a plan, show it to colleagues, partners, and mentors you trust. They can provide an objective view of the business plan and indicate areas where you may need to provide more thorough information.
This is the first section of your business plan and provides a quick overview of what you want to accomplish with your company. This should comprise the mission statement followed by a description of the services and/or products you provide. Use this basic outline:
- Description of the business
- Goals and objectives
- Owner and executive qualifications
- Funding information
- Cash and earnings projections
A more involved company description should follow the executive summary. This section details the business's key information and examines the market segment you want to capture. The company description is the "meat" of your business plan and should include information about:
- The name of your business
- The business location
- The type of business entity (proprietorship, corporation, or limited liability company (LLC))
- How your company is different from its competition
- Growth and success factors
- How the products and services you offer will solve a problem or fill a need for your desired audience
This is also where you should include operational details such as your hiring plan for the first year or two in business with job classifications and duties. You should also indicate the type of facility you will need for operations and where it will be located.
This section will demonstrate your understanding of your specific market as well as your industry as a whole. Include the following information:
- Description of your target market
- Overview of industry projection
- List of all competitors with business analysis of each
Product and Service Information
Describe the products and services your business will offer, providing enough detail for those who may be unfamiliar with your industry. Indicate whether you will need to patent your product idea and/or whether a patent application is pending. You should also indicate other steps you've taken to protect intellectual property such as your business name, product names, logo, and branding identity.
If you are manufacturing a product, include information about the materials you'll need and your suppliers for those materials as well as the production process.
This section demonstrates your plan to make a profit using realistic numbers with a basis in research. Although your ideas are important, you'll also need to show that you will generate enough cash flow to capture a significant market share. Elements this section of your business plan should address include:
- Initial operating costs
- First-year cash flow and sales projects
- Personal expenses
- Start-up and growth financing
- Business bank accounts and/or credit lines
- Projected timeline to a positive cash flow
A strong management team will inspire confidence in potential lenders, investors, and partners. The purpose of this section is to make your people shine by highlighting their unique strengths. This part of your business plan should include answers to these questions:
- Who are your company-level and department-level managers?
- What are their qualifications?
- How many full-time and part-time managers do you need?
- How many employees will each manage and what are their responsibilities?
- How will you fund wages and benefits?
- What are your plans for employee training and mentorship?
Complete your business plan with supplemental information that will strengthen your case. Finish with a summary that restates the highlights of your plan and indicates your determination to succeed as a business owner. Attach supporting documents such as licenses, permits, patents, product diagrams, building blueprints, and letters of support from consultants and/or your accountant and attorney.
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