• A business plan is a written description of a business’s future that conveys the business’s goals, strategies, potential problems and solutions, and organizational structure.
• Business plans are used to attract employees, prospect for new business, deal with suppliers, and to show to potential investors.
• A good business plan should include an executive summary, market analysis, management plan, and financial plan.

A business plan is a written description of a business’s future. It describes what the business plans to do and how they plan to do it. Business plans have a variety of purposes.. They are used by investment-seeking entrepreneurs to convey their vision to potential investors. They may also be used to attract key employees, prospect for new business, deal with suppliers, or to understand how to manage a business better.

A business plan conveys a business’s goals, the strategies they’ll use to meet them, and potential problems that may confront the business, along with solutions to those problems. Business plans list the organizational structure of the business including titles and responsibilities. Business plans also list the amount of capital required to finance the business venture and keep it going until it breaks even.

Sound impressive? It can be, if put together properly. A good business plan follows generally accepted guidelines for both form and content. Although there are various sub-sections that some businesses use, a business plan has four main elements:

1. Executive Summary — This area includes the company’s mission and vision statements, the objective of the business plan, and a company description. The executive summary should also include a summation of the other sections of the business plan as well as a discussion of the nature of the business and its location. This section is also where a business identifies their niche in the market and what advantages they have over the competition.
2. Market Analysis — The market analysis should describe in detail the potential of the service or product the business is offering as well as how they intend to create and/or develop their customer base. A market analysis should identify the customers, their demographics, industry trends, and who the company sees as their competition. The price/cost structure and how the business arrived at that figure should also be identified in this section. Most importantly, the market analysis should define how the business will reach their customers, i.e., direct marketing, advertising, sales calls, etc.
3. Management Plan — A plan is as good as the people who implement it. Particularly in the early stages of a company, investors tend to put more stock in the management of the company than the product or service offered. This section should list the company’s management team and key employees. It should include an organizational flowchart that breaks down the duties of the principal members, as well as biographies and brief job descriptions. If there are multiple owners or managers, it is also important to note the financial stake that each management member has in the company.
4. Financial Plan — Financial data and calculations are the make-or-break component of any business plan. This section includes the company’s current financial status as well as future projections. Also included in this section are a balance sheet, profit-and-loss statement, cashflow projections, and a break-even analysis. Whether the company is a start-up or an existing business, three-year and five-year projections should be included in this section as well. These projections should be on cash flow as well as profit and loss.

Creating a business plan is a serious process. Considerable thought should go into each section, as a business plan, regardless of the company’s size, can make or break the company. Business plans do not have a specific length and can vary in size from one or two pages up to a 100-page or longer presentation. The business owner must decide what to include in the business plan to present the business in a positive way to customers, investors, and the industry.