A business plan is a unique document because it details the specifics of one business. Yet, an effective business plan should share themes and a standard organizational format that are common to other business plans. This consistency and uniformity will help investors and other influential reviewers quickly assess your central business concept and identify specific sections of the plan that interest them.
Business plans generally run from 20 to 30 pages, but they can range from 10 to 50 pages or more. The length depends on your preferences and the plan. Keep in mind that, as the owner of the plan, you're likely to be a more passionate reader than most. Put yourself in the shoes of your readers. What do they really need to know? What can be left for a later discussion or report once you've engaged your readers' interest?
Business plan essentials
Your business plan should cover all the elements of your business, along with strategies for growth and success. In addition to a cover page that lists your company name and contact information, your business plan should include the following elements.
Table of contents
Make your business plan an easy, compelling read by listing each section that is included in your plan in the table of contents. A helpful table of contents typically includes:
- Section headings that help readers identify broad-level topics that might interest them.
- Descriptions of what is included in each section.
- Page numbers that readers can use to quickly flip to what they most want to learn.
The executive summary is probably the most important section of your plan. Many readers will first read the summary and then, if they're interested, move on to other sections.
In two pages or less, your executive summary should discuss:
- Your business objectives.
- Market opportunities.
- How your business will make money.
You might find it easier to write the executive summary last, after you've finished researching and writing the other details of your business plan.
Step back and think about what first sparked your interest in starting this business. When describing your company's mission, you should describe it so that someone who is unfamiliar with your field or industry will understand why your business approach has value. This section should include:
- A company mission statement.
- Significant trends, industry innovations, or top players in the market.
- A summary of the current state of your industry and its future. You're creating a map so that you can show where your idea fits in and why your company fills a gap in the industry or addresses a consumer need.
- Description of target customers, as well as your strengths in the marketplace.
- Details of the legal business structure that you anticipate to select or that you have already formed for your company.
Products and services
Explain what you plan to sell by answering these questions:
- What is your product or service?
- What makes your product or service special or desirable?
- Why will customers want your product or service?
- What will your company do that competitors' products or services do not do?
- Where in the market do you plan to position your product or service — top, middle, or mass market?
If your product or service requires training or legal oversight or regulatory compliance, be sure that you include a plan for that as well.
A marketing strategy is the heart of a business. How can you make money if you don't know how to sell your product? Your marketing plan should include the following:
- Summary of your market position and goals.
- Market objectives that include specific targets. The statement, "We will sell 150 widgets by the fourth quarter" is more convincing than, "We will own the market in widgets."
- Customer research or market research that explains the size of your market and the percentage of the market you intend to target.
- Perceived barriers to market entry. Explain honestly what you foresee as difficulties in getting into the market. Describe any special marketing advantages you may offer, such as guarantees or distribution rights.
- Marketing expenses and resources and how they will be allocated.
- Marketing channels that you plan to use, such as e-mail campaigns and radio or billboard advertising.
- Implementation plan that designates responsibility, sets deadlines, and holds people accountable for marketing efforts.
In this tactical section of your business plan, provide details about these issues:
- Office or facility requirements
- Equipment needed or manufacturing capabilities
- Human resources (full-time employees, contractors, consultants)
- Inventory control or quality assurance processes
- Operation funds required, including rents, leases, licensing, registration, and production costs
- A floor plan of the office, retail, or manufacturing space that you've chosen
The management section of your plan is the place to toot your own horn and profile your launch team's achievements, skills, and experience. Usually, investors care more about who's driving a new business than they do about the business' rosy financial projections.
Don't be shy or modest. Provide a biography of each key player in your business and a description of what they bring to your launch party.
The financial section in your business plan is your statement of what money is coming in to your business and what's going out. It should include the following:
- Detailed outline of your cash flow expectations, usually with a 12-month projection.
- Projections for sales, expenses, and margins of profits.
- Projected balance sheet that describes what is required for your business to break even and then become profitable.
The appendices include footnotes, charts, and research that support the assumptions and projections you made throughout your business plan. Items in this section can include the following:
- Media articles
- Research documents or studies
- Advertising or marketing prototypes
- Photocopies of leases or contracts
Tone will tell
Don't get bogged down in an avalanche of facts and figures while drafting a business plan. Instead, walk a judicious line between narrative and statistics. You're telling the story of your business, and you're making an argument for success (and perhaps for backing).
Here are some tips to make your business plan more compelling:
- Capture attention The executive summary of your business plan must be both exciting and readable. Avoid technical or industry terms. If you must use complicated terminology or concepts, be brief and define them.
- Put yourself in the mind of the reader Your business plan is about the market and how you will make money, not about how smart you are for coming up with a fabulous new product. Be sure that you stick to the goal of the plan, which is to persuade readers that your business is a viable entity.
- Be realistic Don't avoid potential weaknesses in your plan, and don't gloss over strong competitors in the industry. Most likely everyone who will read your plan is an interested, astute professional. If you leapfrog problems or difficulties, you lose credibility.
- Showcase your ending Be sure that the last page of your business plan is as dramatic as the first. Don't trail off into numbers or detailed explanations. Sum up your plan with as much enthusiasm as you expressed at the beginning of your plan.
About the authors Adapted from Microsoft Small Business Kit by Joanna L. Krotz, John Pierce, and Ben Ryan. Visit Microsoft Learning to learn more about this book and its authors.