9 ESSENTIAL ELEMENTS OF A GOOD BUSINESS PLAN
update the old plan is tedious to some while others cannot be bothered. Whether you fit into either of these categories of business owners or not, it will become an issue when seeking a loan or investment to grow the company if you are not willing to provide a quality plan.
Too often, the plan is not written with these essential elements, as listed below:
1. Cover Page/Letter – The cover page of the business plan should give the name of the company, owner’s contact information, including address, phone number, and website, if applicable and available. Too often, business plans are created, leaving out the most significant element – the contact information.
2. Executive Summary – This part of the document has sometimes been misunderstood by many. The fact is that the executive summary is just that; a short version of the full business plan, reduced to one to three pages, no more. The summary should outline in brief paragraphs the comprehensive document. It will make it easier for you to present to lenders or other sources who might be interested in your business.
3. Product or Services Offered – The product or service section of the plan should clearly outline what you are offering. It should describe as a best as possible what the product or service will be and how it will be delivered to the customer, whether business, government or consumer.
4. Market Analysis – This section of the plan should solve the how, where, why, when, and who of the viability of bringing the service or product to market. The market analysis should also give industry data, including websites, backing up the need for what you are offer.
5. Company / Owner Background – When a business plan does not include this information, it will detract from the rest of the document, and will certainly have an adverse impact on who needs to see it. The background of the business, owners or partners should be detailed enough that it aids in the presentation of the plan. It should provide the management skills appropriate to the enterprise. Providing resumes can make a big difference.
6. Personnel – Depending on the type and size of the business plan is for, will determine the need for employees. For those using this document to expand their companies, you will want to include what the plans are for increased personnel.
7. Financial Assumptions & Data – This area of your plan is, effectively, the most important part. Think of it as the heart that makes it all work. Completing such financial assumptions as Cash Flow Projections, Income Projections, Sales Forecast, Breakeven Point, and Profit and Loss Projections defines the business financial position and future expectations. This part of the plan should be considered as a top priority, as it then details the financial aspects of how you are going to make money and spend money.
8. Financing Request – Plans developed solely for the purpose securing capital must clearly present justification for said funding need. It is important that the funding request clearly defines the need for a cash infusion. A ‘Use of Funds’ section should be completed to tell the lender how you plan to use the funds. Another area that must be incorporated is the repayment strategies often referred to as 'exit strategies'. You must show how you will repay any borrowed funds.
9. Exit Strategy – Too often, this part of the plan is forgotten. This section should give the reader a clear plan for the future of the business. Whether the company is being sold, adding partners or keeping it in the family, the future of the enterprise should be considered and documented.
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By Karlene Sinclair-Robinson
A business plan tells the history, present position and future viability of a company or idea. It must cover many essential areas applicable to the enterprise. When creating a business plan, it should be logical and not just some pie-in-the-sky dream pulled from thin air.
When business owners think about their business plans, it is often with some pain. The need to work on a new one or