13 Important Contents you must include in a Business Plan

For many entrepreneurs, the business plan is just a formal external document designed with a specific objective in mind-to attract the investors/lenders.

But, as mentioned above it severs various purposes and can be used as a very useful internal tool.

Thus, a business plan is not only about the entrepreneur and investors, it plainly sets out all the important facts about the business, its history, the current situation, the objectives, business models and the business activities to be undertaken.

So it is imperative to create a lucid business plan for the idea that you have. 

Though every business plan is different, depending on the nature and conditions of business and most importantly who prepared it? 

But every plan generally contains certain elements or sections common to all businesses.

These are described below:

1. Title Page:

The purpose of title page is to provide most basic information about the business to the prospective lenders, investors, suppliers and others who plan to seek to contact the owner.

The title page should include the following:

  • Name of Business
  • Address
  • Phone Number
  • Twitter/Facebook/E-mail address/website (if any)
  • Name of Owner

2. Executive Summary:

Executive summary provides first opportunities to the entrepreneur to grab the interest of investors and other parties. It is an abstract of business plan.

As it covers all of the key aspects of a business plan and also highlights the strength of overall business plan it should be prepared in the last.

It should be short, sharp, to the point and attractive enough to grab readers’ attention. It should not be more than 1 or 2 pages.

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Executive summary should provide a brief outlines of organisation’s objectives, goals, current position, key strengths, market opportunities, financial projection and a summary of skills of management team.

3. Table of Contents:

It provides an outline of what business plan includes.

Table of contents cannot be prepared until business plan is complete.

Table of contents should refer the reader to the sections and subsections of business plan.

The table of contents should have a proper page number for all sections and subsections to help the reader to access necessary information without the need to go through the entire business plan.

4. Business Description:

It is an essential part of business plan. It should include all the key points about the business. Generally, it should include the following information about the company:

  • Business goals, objectives, mission, and vision
  • Business history (if applicable)
  • Products and services offered by the business
  • Nature of business
  • Type of ownership
  • Present position/status of the business
  • Market potential
  • business model
  • Competitive advantage
  • Differentiate your business from others
  • Projection of sales and profits

5. Market Analysis:

This section of business plan highlights the information about the market in which business operates to attract investors/lenders, suppliers, dealers and distributors etc.

The following details should be covered in this section:

  • A brief overview of overall industry/market
  • Market size and segmentation
  • Target market
  • Customers behaviors and preferences
  • Sales forecasts
  • Market risk caused by legislation, changes in technology, or any threat to the industry as a whole.
  • Competition

6. Marketing Plan

Marketing is a broader concept. In fact, it is all about your business strategy.

It starts with identifying the needs and wants of customers and ends with their satisfaction.

Therefore, marketing plan should be written in a broader perspective.

A typical marketing plan should include the following:

  • Marketing objectives
  • Research and Development (R&D)
  • Production requirements and process
  • Products and services offered
  • Important information about products like color, design, features, size packaging, etc. How easy it can be copied by competitors.               
  • Intellectual property rights (IPRs)
  • Details of various services i.e. after-sale, delivery, availability, advice, guarantee/warrantee, finance provided, etc.
  • Quality assurance measures
  • Marketing strategies i.e. product, price, promotion, and place strategies
  • Marketing mix strategy
  • Profile of key competitors i.e. their strength/weakness, turnover, market share, employees, pricing, etc.
  • Marketing budget

7. Financial Plan:

It consists of relevant financial data and information of a business.

Financial planning is very important not only for the investors/lenders but also for the business as it helps to understand the current as well as future position of company’s finance.

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In short, it presents a financial picture of the business and shows expected revenue, expenses, assets, and liabilities.

The following points should be included in a good financial plan:

  • Capital requirement
  • Key ratios
  • Expected gross and operating margin
  • Profit potential
  • Financial projection
  • Assumptions used in financial projection
  • Cost control measures
  • Accounts payable
  • Accounts receivable
  • Fixed, variable, and semi-variable costs
  • Schedule for procurement of capital
  • Schedule for procurement of assets
  • Break-even volume
  • Balance sheet highlights
  • Cash flow highlights
  • Profit and Loss (P&L) Account highlights

8. Operation Plan:

Generally, operation plan is designed for internal use.

It guides how a business is going to make a product, store it and then ship it out to the customers.

It deals with organisational structure, manpower, equipments, machinery, technology and operation.

Some of the information that the operation plan should contain are:

  • Details of the manufacturing process
  • Required infrastructure
  • Plan and machinery
  • Technology requirements
  • Manpower requirements
  • Labour skills and training
  • Quality assurance
  • Operating cycle and layout
  • Raw material to be used
  • Power requirements
  • R&D
  • Material handling
  • Stock management and control

9. Management Plan:

The quality of management is often considered as important factor in obtaining finance.  

Added to this, sustainability, growth, and development of any business also depend on the qualification, experience, skills, and training of a management team.

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Therefore, a management plan section is regarded as very important part of business plan.

It should include the following:

  • Provide details of organizational structure
  • Key personnel
  • Key future personnel
  • ole and responsibilities
  • Number of staff required
  • Forecasted labour force
  • The need for skills development
  • Need of training
  • Strength and weakness of management team

10. Risks factors:

Actual and potential risks factors should be presented in the business plan to make it more real, transparent and reliable.

They are a standard part of systematic business plan, whether the plan is designed for internal use or will be presented to the outside investors.

Analysis of risk factors also ensure that entrepreneur have considered all the risks and plan how to manage or reduce the risks and most importantly the business can survive when the things go wrong.

Following risks factors should be analyzed and presented in this section:

  • Failures to meet production deadlines
  • Business cycle
  • Industry trends
  • Change in technology
  • Change in demand
  • Problems with labour, suppliers or distributors
  • Competition
  • Inadequate capital
  • Government regulations
  • Other factors

11. Exit Strategy:

Final part of the business plan outlines exit strategy of business.

Mention of this strategy in business plan is very important as rational investors are always interested to know how they will collect their money if business fails.

The most common exit strategies and considerations these days for planning purposes are:

  • Sell it
  • Friendly buy out
  • Initial Public Offerings (IPOs)
  • Merger and acquisitions
  • Liquidation

Added to these, in exit strategy it is important to mention who are potential buyers of the business, why they are interested, and how you will get to them.

12. Conclusion:

It should provide a generalization of the business plan so that the people who seek to establish contact with the business may easily understand the business plan. SWOT analysis of business should be presented in the conclusion.

13. Appendices:

Any additional detailed or information that could be useful to the readers of the business plan, but not appropriate for distribution to everyone, should be presented in appendices.

Generally, the following information is presented in appendices:

  • Market research report
  • Contract with vendors
  • Contact with investors/lenders and financial institutions
  • Types of business risks
  • Photographs
  • Production flow chart
  • Press release
  • Contingency plans.

CONCLUSION

Thus, a business plan is not only about the entrepreneur and investors, it plainly sets out all the important facts about the business, its history, the current situation, the objectives, business models and the business activities to be undertaken.

Though every business plan is different, depending on the nature and conditions of the business and most importantly who prepared it.

But every plan generally contains certain elements or sections common to all businesses and some of them are the title page, executive summary, table of contents, business description, market analysis, market plan and etc. Go through them which are described above.