Writing a business plan is one of the most important things you can do for your business, so we decided to give you a little help. While we are no experts, we do have some great tips on how to begin yours. With so many sections that need to be included, writing a business plan can be a pretty daunting task, however many have found that breaking it into smaller parts makes it less intimidating.
A business plan consists of about 11 main sections: Executive Summary, Company Description, Industry Analysis, Target Market, Competition/Market Share, Strategic Position, Marketing Plan/Sales Strategy (Distribution), Operations, Management/Organization, Financials, and Exit Plan. Now, some of these sections can be merged together depending on your particular business model. Nothing is written in stone. This series is simply a guide to get you started. At the end, we will also list some resources for you reference that can further help with the development. Let’s get started.
While the Executive Summary appears first, it should be written last, therefore we are going to start with the Company Description.
Disclaimer: I am not an attorney and this is not legal advice. This guide is for informational purposes only. Please consult your own legal and accounting professionals for information on your specific formation.
Tell them all about your business.
Before you can get into the nitty gritty of your business plan, you have to tell the end user (your investors, stakeholders, and whoever else will be reading your plan) what your business is all about. This is the section where you give basic details such as your business name, legal status (sole proprietorship, partnership, LLC, or corporation), products, services, mission statement and achievements to date. Depending on how far along you are into your formation this part can be easy to complete or time consuming.
Items you would want to include in your company description section:
- Company Name
- Company’s Objective or Mission Statement
- Legal Formation
- Management or Leadership
- Location of the Business
- Development Stage
- Achievements to Date (if any)
- Financial Status
What’s in a name? When it comes to naming your business, EVERYTHING! You may have many different “names” associated with running your business, such as your own name, the legal company name, a ‘dba’ (doing business as), brand names, subsidiary company names and a domain name. Your particular business may not use all these types of names, these are just examples. When choosing a name, consider one that relates to your business, but also allows flexibility in the future. For example, using a very descriptive name such as Tom’s Home Repair, can limit growth and is more confining than using a name such as Roof-tastic Roofing Services. Also, having a unique domain name for your website is important. Be sure to include in you description that you have secured the rights to a memorable website name.
COMPANY OBJECTIVE/MISSION STATEMENT
A successful business will be able to describe the overall goal of the business. An effective mission statement will speak to the philosophy and mission of the company and guide all aspects and activities of the business. You should be able to do this in just a few sentences. This statement will provide focus for your company and should be it’s guiding principle for the next few years. This is something that can be tweaked as your needs change over time.
To incorporate or not to incorporate? That is the question. Choosing a legal structure is one of the most important decisions you can make pertaining to your business. Most businesses start as a sole proprietorship or partnership because it is easy and there is no paperwork to file. However, as your business grow, you may want to further protect your personal assets by incorporating as an LLC or corporation. Each state has different rules, so you want to check with your specific state to see which works best for you. This is also where you may want to enlist the help of a legal professional.
This part of your business plan can be short or may need to be very descriptive. If your product or service is very tech-y or proprietary, you would want to spend a considerable amount of time on this topic. This is kind of the meat of what you are doing. This is what your business is! This is what you do! In this part, you want to clearly describe your products and/or services. Be as descriptive as possible without disclosing sensitive or proprietary information. If you have a large line of products, there’s no need to list every single one, as long as you break it up into categories.
MANAGEMENT AND LEADERSHIP
In this section, you want to include your leadership structure. Do you have a Board of Directors? President? Chief Executive Officer? You want to list this information here as well as any other key members of management. If you have formed an LLC or corporation, you want to indicate how often your governing body meets.
List where your business will operate from. If you have a physical location, list the physical address. If you operate from home, notate that as well. If you have not yet secured your location but intend to, then list the area of actual location you intend to secure. It is also very important to discuss the geographical area of your location. If you are opening up a boutique, are there other stores in the area that my either serve as competition or drive traffic to your location? What other businesses are in the area? Make sure you know this information.
In this section, you want to talk about where you are in the development of your company. Have you already started selling products/services? Is this just an idea? Are you in the funding stage? Whoever is reading your business plan should be able to clearly identify where you are in the development of the business. State when you company was founded, next indicate the phase of development. Are you just a seed company (a business idea or concept with no sales yet), a start-up (early stages of sales) or looking for expansion.
ACHIEVEMENTS TO DATE
Even start-ups have accomplishments. Have you already developed the recipe for your lotion bar? Have you already developed your website? Have you already sold jars of the salsa your company makes? These are your accomplishments, don’t be afraid to list them.
In this section, you should talk about how you have been funded up to date. Did you receive money from angel investors or are you fully funded by yourself? Do you already have investors that are looking to receive their investment back? Also indicate any major financial obligations, such as loans and investments and the terms of these obligations.
Hopefully this has gotten you on your way with writing your business plan. Look out for the next section when we tackle the industry analysis.