4 Key Components of a Business Plan

In a previous blog post, we described 5 main purposes of a business plan. But once you decide to write one, what should it include? While the level of detail will depend on the specifics of your business and whether you’re writing the plan for yourself or to use as part of a pitch for funding, any business plan should include these four components.

  1. Company Information
    Your business plan should provide detailed information about key aspects of your company. Some of the information in this section and the next one will grow from your lean business model canvas:
    • Ownership: What is the company’s organization structure (eg, sole proprietorship, partnership, LLC, S corp., corporation)? You should understand why you’ve selected that structure.
    • Mission: Why are you going into business? What impact do you intend to have in your community or marketplace?
    • Value proposition: What is your unique offering? What makes your service or product a better value to a customer? (This blog post explains what should be included in a unique value proposition.)
    • Key Partners: Who are your business partners and your potential strategic alliance partners? Who are your professional advisers and investors? Who are your coaches and mentors? All of these people are as much a part of your team as your employees.
    • Key Resources: What are the resources you will tap into to be successful? What past experiences qualify you to operate this business? What are the organizations that will support your efforts (eg, incubators)?
    • Revenue Streams: How will your business make money? Identify your services or products.
  2. People
    Your business plan should identify key people and businesses connected to your business. These may include:
    • Strategic Partners: These people are not owners or employees of your business; instead, they own or represent other businesses that can align their marketing with yours to help you grow. (For example, a realtor may have a strategic partner who is a loan officer.) Your plan may identify types of businesses until you know specific businesses entities that will align with you.
    • Investors: Identify any individuals who have invested sums of money into the capital needs of your business. They may be equity owners or other financial investors.
    • Officers and Employees: In the early stages of your business, your plan will identify positions until actual names are known.
    • Vendors and Suppliers: Identify every entity that will provide services or materials to your business. This may include banks, accountants, attorneys, insurance agents, other professionals, manufacturers, retailers, wholesalers, utilities, car dealerships, schools, government agencies, and so on.
    • Customers: What types of customers or customer groups will you target? List specific names if known.
    • Competitors: Identify your business’ competitors, including what they offer and their strengths and weaknesses. How will you compete against them?
  3. Strategy
    Your business plan should outline your business strategies. Begin with your vision statement: where you will take the business and what it will be in the future. Then identify the key objectives you will achieve to fulfill your vision. As described in this blog post, this information is the start of a strategic plan that will include:
    • Management and Oversight: How will the business be organized, who will do what, when, how, and why.
    • Product or Service Delivery: How will the business perform its mission of delivering products and services – what channels, methods, and quality?
    • Sales Forecast: Predict the financial benefits of opening this business. The plan should show expected sales by product or service.
    • Staff Hiring and Management: Who will you hire and what qualifications will you be looking for? How will they be managed, and what are your expectations of staff?
  4. Finances
    Your business plan should include numbers to back up what you’ve described in the narrative sections of your plan. These financial projections should include:
    • Funding request: How much capital will you need and how will you raise it?
    • Capital infusions: List expectations for specific rounds of investing and specific investors.
    • Debt: Will you use debt financing? In what ways? How much? What are your expectations?
    • Equity: How much of the company’s equity will you and your partners retain and how much will be given up to investors? Begin to identify the valuation of your business.
    • Expenses: Account for expense categories and specific expenditures.
    • Revenues: Account for revenue streams and amounts.
    • Profit: Forecast all financial aspects, including profitability.
    • Financial Statements: Create pro-forma financial statements based on the expenditure and revenue forecasts you’ve developed.
  5. For more information about this and other topics, consider registering for the NaperLaunch Academy workshop series or scheduling a one-on-one appointment with a business librarian or NaperLaunch coach.

Posted: 
Friday, September 3, 2021 - 08:00