A business plan details and recommends an action in business and is addressed to someone who can take action on the plan, such as an investor or manager. It typically sells a business venture—such as a new business or expansion—and outlines how and why it will be a good investment.
Because business plans are usually asking for funding, you should pay particular attention to audience. Your audience will want to know (1) what you are requesting, i.e., time, skill, money; (2) why the project is worth an investment; (3) what risks are involved and how they will be handled; and (4) what, in detail, your business will look like and how it will operate. Your audience will want these points covered clearly and concisely. Get to the point, and don’t waste your readers’ time.
Organize information so that it is easy to locate. The parts of a business plan can vary, depending on the specifics of the plan, the venture proposed, and the audience, but consider all of the following:
- Executive Summary. A brief summary of the highlights and main proposal or recommendation addressed to a managerial or executive audience.
- Table of Contents/List of Figures. A guide to make everything accessible.
- Introduction. A brief overview of the need for the business and how it will operate.
- Background. A description the current situation that explains how your product, company, market, or campaign meets a need or solves a problem and does so better than the competition.
- Options. Possible ways to address the current need or problem, including the plan you recommend.
- Plan. The details of the option you recommend and the benefits.
- Implementation. The detailed specifics of what it will cost (resources or investment) and how it will be carried out, including budget, timeline, licenses, etc.
- Supporting Documents. Data that supports the implementation.
- References. Citations referencing any background or supporting information cited.
You should use sub-headings when necessary within these categories so that the information is easy to find. For example, Background might contain the following sections: Untapped Potential, Market Share, Competition, and Current Location.
The introduction gives the reader a brief orientation to the plan by explaining why it is needed, what it will look like, and what it might accomplish. The details will be provided throughout the other sections of the report. This is the place to announce your vision for what the business could be.
Ex. I propose a bistro-style restaurant for College Station located in the East Gate area close to the University. Aliki Green’s will serve only organic foods and will feature locally grown, fresh produce, grass-fed beef, and vegetarian selections. There is no such restaurant in the area, and vegetarian/vegan options are limited, yet market research shows that the university is home to a large population concerned with nutrition, animal rights, and sustainable practices.
The background section explains the current business climate related to the planned enterprise. It may define a problem that the plan will rectify or improve or identify an untapped market. What is the market share and how will you attract a segment? Who else has a share of the market, how successful are they, and how will you compete? It might be necessary to include general statistics about the area where you want to locate the business to show that it can be supported or that the customer base is available. Note the specifics included in this plan to locate a business in Monterrey:
Ex. Currently, Monterrey stands out with a staggering income per capita of $18000, 100 percent higher than the rest of Mexico. Over 2000 foreign companies are located in the city, helping it to create 7.6 percent of Mexico’s total GDP. This figure is disproportionate to the population, as only 4 percent of the country lives in Monterrey. More than 60 universities exist in the area, and many are establishing new research centers. The city has allocated land and begun construction on a large research and development park that includes several universities and big name companies, including IBM.
You can also use the background section to introduce people who will be involved in implementing the plan, including their educational credentials or previous relevant experience. The key to a good background section is details and specifics.
If you are proposing a solution to an existing business’s problems, you may provide a few options and then recommend one. The advantage of providing more than one option is that it shows you’ve considered all possibilities and have selected the best; it’s also a good strategy if you were charged with thinking about alternative solutions. If, however, you want to advocate strongly for one plan, it may be unnecessary to include other options—unless ignoring them would make it look as if you haven’t researched the situation thoroughly.
Plan and Implementation
This section details your proposed business plan or solution and highlights the benefits. Your solution may be elegant and ingenious, but if it cannot be implemented in a reasonable time frame and for a reasonable amount of money, it won’t be acceptable. Remember that your audience wants details about how you will execute the plan and what it will cost in terms of risks and resources. Is the plan feasible and realistic? Provide a budget, a timetable, or whatever else can show that the answer to both is yes. Some of the sub-sections might include Mission, Products or Services, Management, Personnel, Marketing Strategy, or Location. If any licenses or permits are needed, explain the process or costs associated with acquiring them. Don’t neglect the timetable—how long will it take to get the business running, and when will it be profitable?
Go over the finances carefully, including any loans required and capital needed for startup (for example equipment, supplies, insurance and other overhead). Explain when and under what conditions the business will become profitable and returns on the investment can be expected, and project the potential size of those returns. Project losses and risks, and explain how you will manage risks. If you can, provide a detailed, month-by-month balance sheet for the first year, and a quarterly analysis for the second and third years.
Supporting Documents and References
Keep the supporting documents at the end so they don’t clutter the report. They are there to make your case more convincing by offering details, so do mention them in the report to that readers know they can refer to them if they wish. Your supporting documents may include balance sheets, sales projections, market analysis surveys or data, leases, legal notices, letters of intent from suppliers, or anything else that supports your case. Cite any sources you used in preparing the plan and include them in a References section. Readers should be confident that they can go back and find your original sources and check that you cited them accurately.