Writing a Business Plan
Business plans are the face of your company, and can make the difference in whether or not you
receive a loan or whether someone chooses to invest in your company. The importance of a good
business plan cannot be overstated, as it defines your business, sets your objectives, and enhances
your ability to make sound business decisions in line with your overall business
goals. Although all business plans vary slightly, there are six primary sections that should
be included in all plans.
Section 1: Executive Summary
The executive summary is perhaps the most critical part of your business plan, as it is
sometimes the only section that will be read before deciding whether or not to consider your
business for a loan. If a lender or investor likes what is written in the executive summary, he or
she will continue reading; otherwise, you may not get another chance to impress them with your
business idea.
The executive summary should describe your business and highlight the key points from each
section of your business plan. For example, the executive summary would not include an exhaustive
list of your competitors and their products—that is for the marketing and sales section—but it
would mention how your product differs from others on the market and what you have to offer that is
special. The executive summary should be no more than one or two pages, and although it comes at
the beginning of your business plan, it is recommended that you write this section last to ensure
you highlight the most important points of each section.
Section 2: Business Opportunity
The business opportunity should answer the question, is my business idea viable? This
section should first define the simple vision for your company. Provide an overview of your
business, including its history, progress to date, and vision for the future. Questions to be
answered in the overview of your business include: Have you started conducting business? If not,
when? If so, what progress have you made? Did you acquire this business from a previous owner or
start from scratch? If you acquired it, what is the history of the business previously?
Second, the business opportunity must address your product, including why it is different,
why customers will buy your product, whether or not your product is already developed, and whether
you hold or plan to hold any patents, copyrights, or trademarks. Questions to be answered in the
overview of your product include: Have you already developed this product? If yes, have you begun
selling the product, and how has it been received? If no, what are your plans and timeline for
development? How is this product unique, and what are the benefits to using this product instead of
a competitor’s product?
Section 3: Marketing and Sales Plan
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Hot Tip:
A marketing plan is critical to entrepreneurial success because it tells you who you need to
reach and how you are going to reach them. Without customers, you have no business.
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First, define your business and the product and/or service you are going to sell and create an
overview of your market area. Identify your competition and the products or services they offer,
what you can offer that the competition does not, and how you will attract customers away from the
competition. Include the price of your product, how it compares to the competition’s price, and why
you can offer it for less money or how you plan to attract customers despite a higher price.
Finally, give an overview of how you will sell your product or service (online, face-to-face, etc.)
and how that relates to the competition’s sales methods.
Next, describe your customers, including their demographics, needs, patterns and preferences.
Describe the size of your target market and what they will find attractive about your product
opposed to products currently on the market. How does your product better respond to their needs
and preferences?
Third, outline your marketing strategy by identifying the methods you will use to market your
product to your customers. Will you advertise only on television? Will you place ads in the
newspaper or local periodicals? Would billboards be appropriate, or should you send out bulk
mailings? Include in your strategy whatever ways you see appropriate to reach your customer base,
and identify what percentage of your total marketing dollars you will dedicate to each marketing
method.
Last, create your marketing budget. Effective marketing is critical from the first day;
otherwise, no one will know about your business! Research marketing costs in your area. If you plan
to rent a billboard on the main interstate for three months, find out exactly how much it costs. Do
not guess on marketing costs—research and determine the exact numbers it will take to market your
product to your target audience. If costs seem too high, eliminate high-cost options or look for
marketing strategies that reach fewer people overall but reach a higher number of people in your
targeted customer base.
Section 4: Management Team and Personnel
It is important to demonstrate that your management team and/or staff have the skills and
qualifications to handle every facet of your business. Is there evidence of expertise in marketing,
finance, operations, and development? This section of your business plan should outline the
structure and key skills of your staff. Define the positions of your staff, their role in the
company, and a summary of each person’s background, experience, and qualifications. Include the
time commitment of each individual (e.g., full-time, part-time, one day a week); also include
descriptions and qualifications for consultants and partners. If you have not begun hiring
employees, include the structure and key skills of staff you plan to hire, a timeline for hiring,
and the salaries you estimate to assign to each position. Identify recruitment and training
procedures, timelines for doing so, and the costs of employee training.
Section 5: Operating Plan
Your business plan must include a section covering your operating capabilities and plans. The
areas you should cover in this section include office space and location, production facilities,
and information technology (IT) infrastructure.
Office space and location will include where you will house your office (e.g., in your home,
an office building, etc.), the costs associated with this location, the benefits and disadvantages
to being housed in that location, whether you rent or own the space, and (if you rent) the duration
of your lease. If you have plans for upgrading your space or relocating, that should be included as
well.
If your business requires you to create a product, you will have to include a paragraph on
your production facilities. This should include whether you already have facilities and whether you
plan to do your own production or outsource it to another company. It should describe the benefits
and disadvantages to handling your own production versus outsourcing it, as well as the facilities
you have or need, the capacity of the facilities versus anticipated demand, and whether you plan on
making an investment into enhancing your production capabilities.
Finally, this section should include a description of your IT infrastructure, including the
strengths and weaknesses of your system, your plans to upgrade the system, and how your system will
be used as a business tool.
Section 6: Finances
The final component of your business plan should be your financial forecasts. The purpose of
this section is to inform lenders and investors of how much capital you need, how secure their
loans or investments are, how you plan to repay the loans, and what your projected sources of
revenue and income will be. To do so, you should include detailed financial projections by month
for the first year and by quarter for years two and three, as well as the assumptions upon which
your projections were made, including the breakdown of anticipated costs and revenues for all three
years. You should also include cash flow statements, loan applications, capital equipment and
supply lists, and profit & loss statements.
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“Most new jobs won’t come from our biggest employers. They will come from our
smallest. We’ve got to do everything we can to make entrepreneurial dreams a reality. “
- Ross Perot, Entrepreneur and Navy Veteran
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