Do I Need a Business Plan?

What sections do I include in my plan?

The following is a general outline of the different topics that should be included in your business plan.

Executive Summary

The executive summary should be one of the last sections to complete; however, it will be the first page readers will see in your business plan.  The executive summary needs to be completed last because it will essentially provide a summary of all of the information in your plan.  More or less it is an introduction to your business, a first impression to readers.   As such it should include

• Major points from each section in your plan
• Company’s mission – a description of your company’s purpose
• Summary of its products or services
• Its customers
• Company’s advantages/weaknesses when compared to Competitors
• Future expectations -  Sales, expenses, overall profits
• Tools required for startup – Inventory, funds, property, equipment
• If this plan is used to obtain financing then the amount of money you need should be indicated here as well as what kind of benefits investors will receive.
• No more than a page and a half in length.

In many cases, this is one of the only sections of your plan that is read by investors or financial institutions, so you have to make this section strong and emphasize all important points.

Summarize this section with a strong closing statement or a conclusion to tie the whole section together.  Convince readers that your business is fully capable of succeeding and therefore worth their investment.

It is important to remember that the summary is the first thing that readers are going to see.  If the summary is poorly written and presented sloppily it reflects terribly on your business and lenders will likely sway away from investing in your idea. 

Background/Company History

Company background is all about explaining where your business or business idea came from.  It should be a summary of your company’s history.  Typically this is under a page long. Include a brief description of how you identified a need for the business and why you think it’s a good idea.

• You should describe where the idea came from and describe the different steps you have taken to develop your idea – This proves to investors/lenders that you have a plan and have worked out the details as opposed to a “fly-by-night” idea, and that there is a distinct need for your business.
• Often lenders/investors are interested in your personal history
  • Your educational background
  • Work experience
  • Previous businesses you have started
  • A description of your skills
  • Knowledge of your industry

Business Profile

A Business Profile provides the reader with important information about your business idea and allows them to see “the big picture”.  Here you will be asked to define and describe your business and exactly how you plan to create your vision.  This section should include:

• An overall description of your company – The “who, what when, where,   how, and why” of your business
• Company goals and strategies
• A description of the business structure, name, members of the  business and their share in the partnership (if it applies)
• Location of the business – Address and phone number
• Legal business type – Sole proprietorship, Partnership, Corporation
• Achievements to date
• Current market opportunity and how you plan to take advantage of this opportunity
• Mission statement– A mission statement should include what  your business intends to offer that differs from other businesses; what  sets your business apart and to whom you are offering it.

Company Philosophy

Company Philosophy is simply a means of describing a business’s core values or morals.  These values create the foundation from which your business will perform work and conduct itself on a daily basis.  i.e.

• Commitment to customer needs
• Commitment to the environment
• Commitment to the community

It provides an explanation of the relationships the business will foster with the individuals and groups with whom it interacts.  It sets the tone to define the business as a responsible member of the community.

External Environment

All businesses operate in a world that is continually changing.  Your organization will be faced with external changes beyond your control that will ultimately have an effect on your business environment.  When developing a business strategy you need to take into consideration all of these forces so you can recognize future opportunities and threats and take a proactive approach to use them to your benefit. 

This section lists the top 3-4 trends in the environment about which you need to stay informed. 

• Identify trends that could affect your business and how you will you handle them?  i.e.  Free trade, recession, taxation, downsizing, elections, changes in labor legislation, political environment

Industry Profile

An Industry Profile contains an analysis of the industry and the economy in which you are operating.  It presents an understanding of the current trends and industry characteristics.

When creating the industry profile it is best to divide this section into two parts:

1. An overview of the industry
2. A look at your business position within this industry

Industry Overview:

• What is the overall size of your industry?
• How many competitors are there? Who are they?
• Are there different sectors in the industry? If so what are they?
• Is there an estimate for the average sales for the year? If so what is it? Include past year’s information if available.
• What does the long-term picture look like for the industry? What does the future look like?
• What were the industry trends over the past 5-10 years?  How will these affect your business?

Industry Position:

• What products and services are you selling and how will that affect the industry?
• What is unique about YOUR business?  What makes you different from the competition?
• What are the complications that arise when attempting to enter into this industry? Is there anything in particular that will  make it hard?
• What will you do to overcome these barriers? 

• Who are your competitors?
• What is your share of this market? If all of your competitors are trying to make  money from the same group of  people, what “piece of the pie”can you claim as yours?
• Are there any patents, copyrights, trademarks, franchise rights that you have or plan to have?

Strengths, Weaknesses, Opportunities and Threats (SWOT):
At this point in your business plan it might be a good idea to include a SWOT analysis.  Basically a SWOT analysis is a look at the Strengths, Weaknesses, Opportunities and Threats of your company.

Strengths   A business’s strong resources and capabilities that can be used as an advantage over the competition.  Consider:

• What do you do well?
• What resources do you have?
• What advantages do you have above and beyond the competition?

Weaknesses   Sometimes the absence of certain strengths can be considered to be weaknesses.  Consider:

• What expertise is lacking?
• Do you have any limited resources?
• Are you lacking competitive skills or technology?
• Does it cost you more to operate than your competitors?

Opportunities   Attractive factors that exist in your external environment (industry/community) may reveal new opportunities for profit and growth.  Consider:

• What areas of your industry are growing and how might you take advantage of these?
• What are people doing differently these days?
• What positive perspectives do people have of this industry and what can you do to profit from these?
• Is there an opportunity to offer a better value of products or services so that people will buy?

Threats   Anything in your external environment that could be harmful to your business is considered a threat.

• Are your suppliers increasing their prices?
• Is the economy in a downturn?
• Has technology changed making your products obsolete?