An Effective Business Plan Includes Ten Important Sections

Typical business plans have ten important sections, all of which are briefly described below. Although each individual section has its own specific purpose, together they represent your opportunity to capture the interest of potential investors.

Executive Summary: This section of your business plan is intended to hook investors. Use it to succinctly describe your product or service, the size and needs of your target market, and your companyΓÇÖs unique abilities and qualifications to fulfill those needs. Investors are busy people, and the best executive summaries quickly but effectively make them want to read the other sections of a business plan.

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Company Analysis: This is your chance to promote your accomplishments. A timeline of fulfilled milestones establishes that your company or management team has successfully executed a plan in the past. If your company uses proprietary technology or has another unfair competitive advantage describe it here.

Industry Analysis: Here, you prove that you have intimate knowledge of your industry, including all the overlapping segments in which your company competes. Include niche trends as well as complete industry figures originating with reputable sources. Be as specific as possible.

Customer Analysis: Your customer relationships are depicted in this section. Use it to prove your understanding of your customers is superior to that of your competitors. Make sure you provide niche market trend statistics as well as relevant customer information, including demographics and psychographics.

Competitive Analysis: In this section, prove you know your competitors. Your competition isnΓÇÖt just other companies operating within your industry – it includes any service or product that customers might use to meet the same needs your company fulfills. It could even be the customerΓÇÖs own actions. Realistically summarize your competitionΓÇÖs strengths and weaknesses.

Marketing Plan: Your Four Ps – product, promotions, price and place – go here. Describe your product thoroughly, along with how youΓÇÖll promote it, your pricing strategy and your channels for distribution. Show your potential investors that you know exactly how to get your product into the hands of your customers.

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Operations Plan: Here you need to describe how your company services its customers. Describe your companyΓÇÖs daily activities as well as your long-range operations, and include the specific dates youΓÇÖre projecting for new product releases, additional hires, achieving various financial milestones, forming strategic partnerships, securing customer contracts, future funding tranches, and an initial public offering. Venture capitalists and other potential investors want to see exit strategies and other ways to cash out.

Management Team: Your management team drives your companyΓÇÖs success, so provide biographies of all team members as well as your Board of Directors. Describe their previous accomplishments in order to prove their ability to carry out a plan and build a business. Fill any crucial management gaps before you finalize your business plan.

Financial Plan: This is the section of your business plan where investors spend most of their time, because it sets forth the plan for how they will benefit by investing in your company. Your financial projections (pro forma statements) must include dates for market penetration levels, number of employees and operating margins as well as potential mergers, acquisitions, and initial public offerings. Be scrupulously realistic in your projections.

Appendix: This section includes any overflow documentation that supports the claims made in the earlier sections of your business plan. Some examples include correspondence from customers and/or partners, technical drawings, information regarding patents, a comprehensive list of competitors, a list of key customers, and so on.

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