Five Crucial Components of a Business Plan

Five Crucial Components of a Business Plan

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The format of a Business Plan is something that has been developed and refined over the years and is something that should not be changed. Like a good recipe, a business plan needs to include certain ingredients to make it work.” />

Five Crucial Components of a Business Plan

The format of a Business Plan is something that has been developed and refined over the years and is something that should not be changed. Like a good recipe, a business plan needs to include certain ingredients to make it work.

When you create a business plan, don’t attempt to recreate its format. Those reviewing this type of document have expectations you must meet. If they do not see those crucial decision-making components, they’ll see no reason to proceed with their review of your business plan, no matter how great your business idea.

Executive Summary Section

Every business plan must begin with an Executive Summary section. A well-written Executive Summary is critical to the success of the rest of the document. Here is where you need to capture the attention of your audience so that they will be compelled to read on. Remember, it’s a summary, so each and every word must be carefully selected and presented.

Use the Executive Summary section of your business plan to accurately describe the nature of your business venture including the need that you plan to fill. Show the reasons why people need your product or service. Show this by including a brief analysis of the characteristics of your potential market.

Describe the organization of your business including your management team. Also, briefly describe your sales and marketing plan or approach. Finally include the numbers that those reviewing your business plan want to see the amount of capital you seek, the carefully calculated sales projections and your plan to repay the loan.

If you’ve captured your audience so far they’ll read on. Otherwise, they’ll close the document and add your business plan to the heap of other rejected ideas.

Devote the balance of your business plan to providing details of the items outlined in the Executive Summary.

The Business Section

Be sure to include the legal name, physical address and detailed description of the nature of your business. It’s important to keep the description easy to read using common terminology. Never assume that those reading your business plan have the same level of technical knowledge that you do. Describe how you plan to better serve your market than your competition is currently doing.

Market Analysis Section

An analysis of the market shows that you have done your homework. This section is basically a summary of your Marketing Plan. It needs to show the demand for your product or service, the proposed market, trends within the industry, a description of your pricing plan and packaging and a description of your company policies.

Financing Section

The Financing section must show that you are as committed to your business venture as you expect those reading your business plan to be. Show the amount of personal funds you are contributing and their source. Also include the amount of capital you need and your plan to repay this debt. Include all pertinent financial worksheets in this section: annual income projections, a break-even worksheet, projected cash flow statements and a balance sheet.

Management Section

Outline your organizational structure and management team here. Include the legal structure of your business whether it is a partnership, corporation or limited liability corporation. Include resumes and biographies of key players on your management team. Show staffing projection data for the next few years.

By now you’re probably thinking that you don’t need Business Plan just yet. Well you do, and there is business plan building software that can help you through this immense project. These software packages are easy to use and affordable. Use one today and produce a professional-quality Business Plan including all critical components tomorrow!

Copyright © 2004 Cavyl Stewart. Get more software tips, strategies and recommendations to help you create your business plan by signing up for my Exclusive 100% free, 100% original content ecourse: “How To Failure-Proof Your Business Instantly.” To sign up please visit: http://www.find-small-business-software.com/bizplan-ecourse.html

article source: adzines.com

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About Granger Whitelaw

Granger Whitelaw founded the Rocket Racing League along with partner, Peter Diamandis in 2005. See more information at http://www.grangerwhitelaw.com/blog and http://grangerwhitelaw.brandyourself.com View all posts by Granger Whitelaw

19 responses to “Five Crucial Components of a Business Plan

  • Jeshelle

    These five crucial components of business plans are indeed helpful for our business and many are now experiencing crisis for their companies and it is so sad to have friends that are experiencing like that now. This article will be so helpful for those who want to establish business and it is really nice to read that financing in our business should not be limited in fact the Financing section must show that you are as committed to your business venture as you expect those reading your business plan to be. Thanks for your post.

  • Winny

    Five crucial components of a business plan is quite not easy to learn thing but it is worthy to be studied and as the first tip says that a well-written Executive Summary is critical to the success of the rest of the document, is what I will remember and I will not forget since it is really useful for my future business. I want to try business someday because I think it is kind of advantage and edge if I will have business.

  • Kylle Greg

    It is really very important to include the legal structure of your business whether it is a partnership, corporation or limited liability corporation, because it will be joined in papers for legal terms and also agreements for some instances and some needs for legal processes. Anyway I enjoyed a lot reading and keep on writing because many of us here will really wait for your next entry.

  • Gregoria

    It is good to know about business plan on this article and also I want to share what I have read on some that a business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals. Plans are always important and not just on business.

  • Velma Day

    I will surely try your software packages “These software packages are easy to use and affordable. Use one today and produce a professional-quality Business Plan “, and I find this article helpful and at the same interesting though I am a little worried if my competitors will read this article also ha ha lol , I am just kidding. Anyway it’s been a nice time reading this long article though interesting and full of knowledge that can be use in my business. Good job!

  • Moriya

    So this is about business plan and strategy. I read some articles on other websites and they are also informing such things just like these written on your very own article but your article have some ideas and information that I only have read here. Strategies are really not simple thing to do since it involves a great time and a long hours or even days. I am not much of a thinker and I am not a genius and I also don’t have mind to make a plan very fast so having a business plan is really a hard task for me.

  • Rejina

    The capital in any business is very important, just like this one “Finally include the numbers that those reviewing your business plan want to see the amount of capital you seek”, it is very important since it is your first step in your goal on having a company or business that is productive. Of course no one wants to have a business that will fail eventually. My point is the capital should be planned well and must be studied well first in achieving or making your company since you can’t have a good and productive business if you can’t calculate your capital at the first place.

  • Sanji

    I’ve had experience both developing business plans and reviewing them for potential investments. Although an idea is what often gets investors interested, a business plan is definitely needed to get financial support from them. The simple act of writing down your idea and outlining how the business will operate can be helpful to ensure that you communicate your vision and that everyone is on the same page.

  • Jack

    I am glad to read such quite impressive article about business plan. I hope everybody will take note of some of your important lines here in your article and it must also be remembered that business plans may also target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business plan is required, since investors will look for their annual return in that time frame. I am glad to share this to all of you that I have also read.

  • Lucia

    Since A business plan sets out your goals and how you plan to achieve them, it is better if you really put many foundations on making it stand on your plan. It finds out what you need to include and how to write an executive summary and by that you can always monitor what you have done and what will you do on the incoming days, months or years. Planning really takes time that is why you should have a brief yet targeted business plan which will guide you to your aim..

  • Brenyl Houtson

    I have seen this one also and this answers my question “The format of a Business Plan is something that has been developed and refined over the years and is something that should not be changed”, this one answers my question about format. It should not be changed and I agree with that because it’s a format that should not be edited due to its simple yet organized setting. Just like any format it is very important not to be changed because many already know the format and they are expecting it to be as is and in that way always and permanently.

  • Richard Plede

    Since it is stated in wikipedia that A market analysis studies the attractiveness and the dynamics of a special market within a special industry. It is part of the industry analysis and this in turn of the global environmental analysis. Through all of these analyses the opportunities, strengths, weaknesses and threats of a company can be identified. In my opinion analysis is really crucial in one business that want to survive and want to grow and have a progress. I think a good company is really productive if always planned very well.

  • Orange

    Just as a builder uses a blueprint to ensure that a building will be structurally sound, the process of creating and writing a blueprint for your business–called a business plan–will help you determine whether your business will be strong from the start. Without a business plan, you leave for too many things to chance.

  • Sarry

    Sadly in the world of business this is true “If you’ve captured your audience so far they’ll read on. Otherwise, they’ll close the document and add your business plan to the heap of other rejected ideas.”, to be rejected by others is quite a hard thing to experience and of course no one would like to experience it and that is why we should really plan well our business.

  • Jergy

    This is one of the main parts in business plan “Be sure to include the legal name, physical address and detailed description of the nature of your business” it is very formal and necessary to include this one because this is your identity and without this your business will just be nothing. I appreciate much of legalities that you have involved here in your article and it seems like I am just like reading a RA paper and it is really great.

  • Ferdy

    Since we already know that “Business plans may also target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business plan is required, since investors will look for their annual return in that timeframe.”, this is also an explanation or definition by some website that I know and you know this is very important since understanding this first is better than jumping to the plans.

  • Ramson

    Your business plan here is good and you have point in the formalities in any business plan. I am not so good with document works and so I always read some articles and also guides on paper works. I am right now studying the paper works because this week I will be assign to paper works and if they are satisfied maybe it will be my permanent work for the company. I know I have to study also not just the document works but also some laws that are involved and also related to it. Thanks for letting me post here in your article and I also I want to add that I like this one.

  • Rhio

    I agree with this type of strategy or plan ” It needs to show the demand for your product or service, the proposed market, trends within the industry”, studying the demand and also supply is very crucial and definitely will count on any business. You have to always balance the law of supply and demand and of course we know all about that. Studying also your competitors and what they can give to the people is also a good strategy since you can monitor them and you can always compare your products over them and adjust the things on your product if necessary.

  • Den Serd

    Management Section is quite a section which you need to do a lot of things but of course you have your leaders in it so you don’t have to work the actual work and my point is you need to do a little budget of your people on that section. Anyway the task in that section is quite big and it covers lots of jobs and because managing is not easy since it is the one guiding and running the business or the company. Some people and businessmen disregard the management section but they don’t know how important it is and how valuable to balance that section.

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