To make the best impression on banks and investors, your business plan should be presented in the standard business plan format. Your business plan should be what a banker or venture capitalist expects to see, presented in the order they expect to see it in. Following a standard business plan outline will keep you on track, and save you from botching your best chance at getting your business funded.
Build your plan, then organize it. I don’t recommend developing the plan in the same order you present it as a finished document. For example, although the executive summary obviously comes as the first section of a business plan, I recommend writing it after everything else is done, so you know exactly what appears in the rest of your business plan. Likewise, although the management summary is usually presented towards the end of a finished business plan, it might be an easy place to start writing.
Is the order important? If you have the main components, the order doesn’t matter that much, but what’s presented here is the sequence I suggest for a standard business plan.
In this article, I will cover the following:
See an example of a completed business plan here.
Write this last. It’s just a page or two that highlights the points you’ve made elsewhere in your business plan. It’s also the doorway to your plan—after looking over your executive summary, your target reader is either going to throw your business plan away or keep reading, so you’d better get it just right.
2. Company Summary
This section is an overview of who you are and what you do. It should summarize your vision and what you hope to deliver to your market, but it should also ground the reader with the nuts and bolts: when your company was founded, who is/are the owner(s), what state your company is registered in and where you do business, when/if your company was incorporated, and a bit about your recent sales and growth trajectory.
List and describe the products or services you sell. It is always a good idea to think in terms of customer needs and customer benefits as you define your product offerings, rather than thinking of your side of the equation (how much the product or service costs, and how you deliver it to the customer). Sometimes this part of the plan will include tables that provide more details, such as a bill of materials or detailed price lists, but more often than not this section is just text.
You need to explain the type of business you’re in. You need to know your market and how it’s changing, your customers’ needs, where your customers are, how to reach them and how to deliver your product to them. You’ll also need to know who your competitors are and how you stack up against them—why are you sure there’s room for you in this market?
5. Strategy and Implementation Summary
In the first part of this section, you need to define your strategic position: What do you do for your target market, and what makes you the best? In the second part of this section, you need to outline how you’re going to develop and maintain a loyal customer base. Be specific. Include management responsibilities with dates and budgets, and make sure you can track results.
Describe the organization of your business, and the key members of the management team. Include summaries of your managers’ backgrounds and experience—these should act like brief resumes—and describe their functions with the company. Full-length resumes should be appended to the plan.
At the very least this section should include your projected Profit and Loss and Cash Flow tables, and a brief description of the assumptions you’re making with your projections. You may also want to include your balance sheet, your sales forecast, business ratios and a break-even analysis.
1.3 Keys to Success
2.0 Company Summary
2.1 Company Ownership
2.2 Company History (for ongoing companies) or Start-up Plan (for new companies)
2.3 Company Locations and Facilities
3.1 Product and Service Description
3.2 Competitive Comparison
3.3 Sales Literature
3.4 Sourcing and Fulfillment
3.6 Future Products and Services
4.1 Market Segmentation
4.2 Target Market Segment Strategy
4.2.1 Market Needs
4.2.2 Market Trends
4.2.3 Market Growth
4.3 Industry Analysis
4.3.1 Industry Participants
4.3.2 Distribution Patterns
4.3.3 Competition and Buying Patterns
4.3.4 Main Competitors
5.0 Strategy and Implementation Summary
5.1 Strategy Pyramids
5.2 Value Proposition
5.3 Competitive Edge (see an example)
5.4 Marketing Strategy
5.4.1 Positioning Statements
5.4.2 Pricing Strategy
5.4.3 Promotion Strategy
5.4.4 Distribution Patterns
5.4.5 Marketing Programs
5.5 Sales Strategy
5.5.1 Sales Forecast
5.5.2 Sales Programs
5.6 Strategic Alliances
6.1 Organizational Structure
6.2 Management Team
6.3 Management Team Gaps
6.4 Personnel Plan
7.0 Financial Plan
Cash Flow is the single most important numerical analysis in a business plan, and a standard cash flow table should never be missing. Most standard business plans also include a Sales Forecast and Profit and Loss Statements. I believe they should also have separate projected Balance Sheet, projected Business Ratios and Market Analysis tables, as well as personnel listings.
I also believe that every business plan should include bar charts and pie charts to illustrate the numbers.
More Business Planning Advice
Size your business plan to fit your business. Remember that your business plan should be only as big as what you need to run your business. While every business owner should use planning to help them run their business, not every business owner needs a complete, formal business plan suitable for submitting to a potential investor, or bank, or venture capital contest. So don’t include outline points just because they are on a big list somewhere, or on this list, unless you’re developing a standard business plan that you’ll be showing to someone who expects to see a standard business plan.
Consider plan-as-you-go business planning. I’ve done a lot of work on this idea lately, resulting in my new plan-as-you-go style of business planning, which is now outlined in a book called Plan As You Go, published by Entrepreneur Press and available through Amazon.com and Barnes and Noble, and bundled as an eBook with LivePlan and Business Plan Pro.
Don’t make common mistakes. I’ve seen thousands of business plans, good and bad, and I can tell you that avoiding these common business planning errors will put you far ahead of the curve.
More Business Planning Resources
Sample business plans: Over 500 free sample business plans from various industries.
How to start a business: An easy-to-follow six-step process for starting a new business.
Business Plan Pro: Step-by-step software that makes it easy to create a business plan, regardless of your business planning experience or formal training.