major parts of business plan

• Sources of Business Finance
• Small Business Loans
• Small Business Grants
• Crowdfunding Sites
• How to Get a Business Loan
• Small Business Insurance Providers
• Best Factoring Companies
• Types of Bank Accounts
• Best Banks for Small Business
• Best Business Bank Accounts
• Open a Business Bank Account
• Bank Accounts for Small Businesses
• Free Business Checking Accounts
• Best Business Credit Cards
• Get a Business Credit Card
• Business Credit Cards for Bad Credit
• Build Business Credit Fast
• Business Loan Eligibility Criteria
• Small-Business Bookkeeping Basics
• How to Set Financial Goals
• Business Loan Calculators
• How to Calculate ROI
• Calculate Net Income
• Calculate Working Capital
• Calculate Operating Income
• Calculate Net Present Value (NPV)
• Calculate Payroll Tax

12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

• The name and location of your company
• Products and services offered by your company
• Mission and vision statements
• Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

• Business location
• The legal structure of your business
• Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

• The geographical location of your target market
• Needs of your target market and how your products and services can meet those needs
• Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

• Industry description and statistics
• Demographics and profile of target customers
• Marketing data for your products and services
• Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

• Your competitors' identified advantages in the market
• How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
• The standout qualities that distinguish you from other companies
• Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

• Information about how your company plans to carry out its operations.
• The base location from which your company intends to operate.
• The number of employees to be utilized and other information about your company's operations.
• Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

• Projected income statements
• Cash flow statements
• Balance sheets
• Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

• Legal documents
• Licenses and permits
• Credit histories
• Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

• The management team and other stakeholders resume
• Marketing research
• Permits and relevant legal documents
• Financial documents

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Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

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13 Key Business Plan Components

The Startups Team

As is the case with most big projects, crafting a business plan is one of those things that takes an incredible amount of diligence and no shortage of courage. After all, your business idea is probably more than just some passionless money-making ploy — it’s your dream that you’re getting ready to lay bare for the world to scrutinize!

Never fear!

We have 4 sample business plans here to make it all less scary.

If you approach this with a firm understanding of what key information to include in each section of your business plan and know how each section works together to form a cohesive, compelling, and — above all — persuasive whole, it will make the writing process a whole lot less daunting.

We’re about to help you do exactly that by deconstructing each of the core components of your business plan one at a time and showing you exactly what information you should present to your readers so when all is said you done, you can walk away confidently knowing you’ve penned the most effective business plan possible.

As we learned in the “ What is a Business Plan? ” article, a business plan generally consists of the following sections:

Executive Summary

Company Synopsis

Market Analysis / Overview

Product (How it Works)

Revenue Model

Operating Model

Competitive Analysis

Customer Definition

Management Team

Financial Statements

Let’s dive in, shall we?

1. Executive Summary

In the same way that a great movie trailer gives you a basic understanding of what the film is about while also enticing you to go check out the full-length feature, your Executive Summary serves as an overview of the main aspects of your company and business plan that you will discuss in greater length in the rest of your plan.

In other words, your Executive Summary is the highlight reel of your business plan.

Remember, you’re not giving away every last little detail about your company and business opportunity right up front. Just enough of the “good parts” to both inform and intrigue your reader to dig in further.

You do this by presenting a concise, 1-sentence outline of the following information:

Mission Statement

A “big idea” statement that introduces why your company exists, what it does for your customers, and why it matters.

Product/Service Summary

A brief description of your company’s products or services, with a special emphasis on what makes them unique.

Market Opportunity Summary

A quick explanation of the one or two key problems and/or trends your product/service addresses, and how it translates to a big opportunity for your company (and investors ).

Traction Summary

Highlight a few of the biggest accomplishments that you have achieved and describe how those accomplishments lay the groundwork for what’s to come.

Outline the next objectives or milestones that you hope to meet and what it means for the growth of your company.

Vision Statement

What is the scope or “big picture vision” of the business you are trying to build? If you’re in tech, are you trying to build the next Nest? If you’re in food and beverage, are you aiming to be the next Chipotle? In other words, how big is this company going to get, and why should an investor/partner/hire be excited to be a part of it?

A word of advice:

While your Executive Summary is the first piece of content people will read in your business plan, it’s usually a good idea to write this section last so you can take a step back after you’ve written everything and have a better sense of which high-level information you want to pull from the rest of your plan to focus on here.

First impressions are everything!

2. Company Synopsis

The Company Synopsis section is where you provide readers with a more in-depth look at your company and what you have to offer.

Before your readers will ever bother caring about things like your marketing strategy or your financial assumptions, they’ll want to know two absolutely fundamental details that will set up the rest of the plan that follows:

What painful PROBLEM are you solving for your customers?

What is your elegant SOLUTION to that problem?

You might have the most revolutionary product the world has ever seen, but if you don’t take the time to carefully articulate why your product exists in the first place and how it helps your customers solve a pain point better than anything else out there, nothing else in your business plan really matters from the reader’s perspective.

If you spend the majority of your time on any one part of your business plan, take the time to really nail this part. If you can build an engaging story around the problem that your audience can relate to, it makes the payoff of your solution statement all the more powerful.

When considering how to position your problem in the context of your business plan, think to yourself: what is the single greatest problem my customers face? How do other solutions in the market fail to alleviate that problem, thus creating a major need for my product?

Once you’ve thoroughly explained the problem you’re setting out to solve, it’s time to tell investors how your product/service solves that problem beautifully.

The goal here is less about describing how your product or service actually works (you’ll get to that in the “How It Works” section later) than it is about communicating how your solution connects back directly to the problem that you just described.

Key questions to consider:

What is the product/service you’re offering?

In what way does it solve my customers’ most painful problem?

What impact does my solution have on my customers’ lives?

How does my product/service effectively address the biggest shortcomings of other solutions currently in the market?

3. Market Overview

While your problem and solution statements help set the stage and provide readers with insight into why you’re starting this company in the first place, clearly defining your market will allow you to call attention to the trends and industry conditions that demonstrate why now is the time for your company to succeed.

You’re going to want to supplement your own expertise with plenty of evidence in the form of market statistics and research to show readers that you’re not only an expert when it comes to your product, but your industry as well. Your goal here is to help illustrate:

The SIZE of the market opportunity your company is positioned to address

The amount of GROWTH occurring in your market

The TRENDS driving the demand for your solution

The SUCCESS STORIES happening with similar companies in your industry

Market Size & Growth

Indicating to your readers that your problem addresses a big enough market will play a huge role in how excited they’ll be about getting involved in helping your company. This is where you’ll want to put your research cap on and start uncovering some numbers that help your reader better understand:

How big the market is (locally/nationally/internationally)

Approximately how much revenue it generates every year

If it’s growing

How much it’s expected to grow over the next 5-10 years

What recent emerging trends have you developed your product/service in response to?

Are there any new technologies that have emerged recently that make your product/solution possible? Are there any specific brands or products you can point to that illustrate the demand for products/services like (but not too like) yours?

Examples of Trends

An increasing number of consumers are “cutting the cord,” replacing traditional cable subscriptions with subscriptions to services like Netflix, Amazon Prime and HBO NOW.

As the Baby Boomer generation continues to age, there is a growing demand for products that empower them to stay safe and maintain their independence for longer.

Consumers are increasingly seeking food options that feature locally-sourced ingredients.

The emergence of image recognition technology for smartphones.

Industry Success Stories

Are there any examples of similar companies that investors have supported that you could point to? Are there any recent acquisitions (examples of larger companies buying up companies similar to yours) that could bolster the case for your own exit strategy ? Are there any similar companies that have recently IPO’d (gone public)?

4. Product (How it Works)

You used your Company Synopsis section to cover why your new product delivers crazy value to your customers by breaking down the ways that it benefits your customers and meets a highly specific need for them.

Now it’s time to use your Product or How it Works section to get into the finer details around the mechanics of how it does so.

This might sound like they’re one and the same. Not exactly. And here’s a good way to distinguish this.

Let’s say you were building a subscription box service for pet flea treatment. In your Company Synopsis section, you’d probably spend your time talking about how your solution conveniently spares pet owners the hassle of remembering to make a vet appointment, traveling to the clinic, and waiting to talk with the vet just to pick up Scrambles’ medication.

In your How it Works section, on the other hand, you’d shift your focus to describing how your customers have the ability to choose from a variety of brand name medications, set their own delivery schedule, enjoy 2-day delivery, and gain real-time support 24/7 from a team of industry experts.

What are some of your product’s key features ?

How will customers actually use your product or service?

Is there any technology underlying your solution you will need to explain in order for readers to fully understand what your company does and how it works?

If your product or service has some sort of proprietary element or patent at the core of what makes it work, you might be a bit hesitant to show your hand for fear that someone might run off with your idea. While this is a completely understandable concern, know that this pretty much never happens.

That being said, you can still give your readers a clear idea of how your product or service works by explaining it through the lens of how it relates to the problems that your customers face without giving up your secret sauce.

Put another way, you don’t have to explicitly tell your readers the precise source code to your new app, but you will want to call attention to all of the great things it makes possible for your customers.

5. Revenue Model

It’s the age-old question that every business owner has had to answer: how will your company make money?

If you’re just starting out , clearly defining your framework for generating revenue might seem like somewhat of a shot in the dark. But showing investors you have even a cursory idea of how you will convert your product or service into sales is absolutely fundamental in lending credibility to your business plan.

You’ll want to determine the following:

Revenue Channels

Are you leveraging transaction-based revenue by collecting one-time payments from your customers? Are you generating service revenue based on the time spent providing service to your customers? Are you following a recurring revenue model selling advertising and monthly subscriptions for your mobile app?

What are your price points and why have you set them that way? How does your pricing compare with similar products or services in the market?

Cost of goods sold, otherwise known as COGS, refers to the business expenses associated with selling your product or service, including any materials and labor costs that went into producing your product.

Your margin refers to the profit percentage you end up with after you subtract out the costs for the goods or services being sold. If you purchase your inventory for $8 per item from a supplier and sell them for $10, for example, your margin on sales is 20%.

Why is this revenue model the right fit for this product/market/stage of development?

Are there any additional revenue sources that you expect to add down the line?

Have you generated any revenue to date? If so, how much?

What have you learned from your early revenue efforts?

If you haven’t started generating revenue, when will you “flip the switch”?

6. Operating Model

Where your Revenue Model refers to how you’re going to make money, your Operating Model is about how you’re going to manage the costs and efficiencies to earn it.

Basically, it’s how your business will actually run. For this component, you’ll want to focus on the following:

Critical Costs

Your Critical Costs are the costs that make or break your business if you can’t manage them appropriately. These essentially determine your ability to grow the business or achieve profitability.

Cost Maturation & Milestones

Often your Critical Costs mature over time, growing or shrinking. For example, it might only cost you $10 to acquire your first 1,000 users, but $20 to acquire the next 10,000. It’s important to show investors exactly where costs might improve or worsen over time.

Investment Costs

Investment costs are strategic uses of capital that will have a big Return on Investment (ROI) later. The first step is to isolate what those investment costs are.  The second step is to explain how you expect those investments to pay off.

Operating Efficiencies

What can you do from an efficiency standpoint that no one else can? It could be the way you recruit new talent, how you manage customer support costs, or the increasing value your product provides as more users sign up.

7. Competitive Analysis

Now that you’ve introduced readers to your industry and your product, it’s time to give them a glimpse into the other companies that are working in your same space and how your company stacks up.

It’s important to research both your direct competitors (businesses that offer products or services that are virtually the same as yours) and your indirect competitors (businesses that offer slightly different products or services but that could satisfy the same consumer need).

A skimpy Competitor Analysis section doesn’t tell investors that your solution is unrivaled. It tells them that you’re not looking hard enough.

Pro tip: avoid saying that you have “no competitors” at all costs.

Why? Because while there may not be anyone exactly like you out there, if you say this, the investor is more than likely thinking one of two things: Either, “They don’t know what they’re talking about,” or, “If there’s truly no competition, is there even a market worth pursuing here at all?”

When you set out to identify your fiercest competitors, ask yourself this:

What products/services are my target customers using to solve this problem now?

What products/services could they potentially use to solve this problem now?

Identify at least three sources of competition and answer the following questions about each one:

Basic Information

Where is your competitor based? When was the company founded? What stage of growth is your competitor in? Are they a startup? A more established company?

How much revenue does your competitor generate each year? Approximately how many users/customers do they have? Have they received venture funding? How much? From whom?

Similarities & Differences

What are the points of similarity between your competitor and you in terms of the offering, price point, branding, etc?  What are the points of difference, both for the better and for the worse?

Strengths & Weaknesses

What are your competitors’ biggest strengths? What do you plan to do to neutralize those strengths? What are your competitors’ biggest weaknesses? How do they translate into an advantage for your company?

8. Customer Definition

The name of the game here is to know your audience !

This is where you show readers that you know who your audience is (who’s most likely to buy and use your product), where they are, and what’s most important to them. Are they price-conscious? Do they value convenience? Are they concerned about environmental impact? Do they tend to be early adopters of new technologies?

Once you have a good idea of your customer personas and demographics, you’ll want to explain how you’re designing your products/services, branding, customer service, etc. to appeal to your target audience and meet their needs.

Who are the people that your product/service is designed to appeal to?

What do you know about customers in this demographic?

Does your target audience skew more male or more female?

What age range do your target customers fall in?

Around how many people are there in this target demographic?

Where do your target customers live? Are they mostly city dwellers? Suburbanites?

How much money do they make?

Do they have any particular priorities or concerns when it comes to the products/services they buy?

9. Customer Acquisition

Now that we know who your customers are, the next question is — how do you plan on getting them ? This essentially refers to your marketing plan where you’ll go into detail about how you intend on raising awareness for your brand to expand your customer base .

Which channels will you use to acquire your customers? Direct sales? Online acquisition (paid ads, organic SEO, social, email)? Offline acquisition (newspaper, TV, radio, direct mail)? Channel partners (retailers, resellers)? Word-of-mouth? Affiliates?

Channel Cost Assumptions

There are hard costs associated with every customer acquisition channel. Yes, even social media. It’s your job here to forecast and compile all of the associated costs with a particular channel so that you can arrive at a preliminary budget for what it would cost to use this channel.

Are there specific subcategories of customers that you plan to target first?

Will you introduce your product in certain key geographic locations?

Are there specific components of your product offering that you will introduce to the market first?

Are there any existing brands that you are planning to partner with to increase brand awareness / expedite market penetration?

10. Traction

Many investors see hundreds of deals every year.

If you want to stand a chance of making any sort of meaningful impression, it’s important to show them that your business is more than just an idea and that you’ve already got some irons in the fire.

Traction is a huge part of making that case.

When investors see that Founders are already making things happen, they think to themselves, “Wow, look at everything they’ve already accomplished! If they can do that much by themselves, just think what they can do with my money behind them!”

Here are some common categories of traction that can help emphasize your business is gaining momentum:

Product Development

Where are you in the product development process? Do you have a working prototype? Is your product already in the market and gaining customers?

Manufacturing/Distribution

Do you already have an established partner for production/manufacturing? How about distribution? Tell us about your relationships and what they can handle.

Early Customers & Revenue

Do you have any existing customers? If so, how many, and how fast is your customer base growing? Have you started generating revenue? If so, how much?

Testimonials & Social Proof

Do you have any client reviews or comments that can illustrate positive customer responses to your product/service? Has your product/service been reviewed/endorsed by any industry experts? Do you have any high-profile customers (celebrities or industry experts if it’s a B2C product, well-known brands if it’s a B2B product)

Partnerships

Have you secured partnerships with any established or notable companies or brands?

Intellectual Property

Do you have any patents for the technology or ideas behind your company?

Is your company name trademarked?

Press Mentions

Has your company been featured by any media outlets? Which ones?

11. Management Team

Your Management Team section is where you introduce your team and, if possible, explain how each team member’s background is highly relevant to the success of your company.

You may have gotten a Ph.D. in Chemical Engineering from Carnegie Mellon, but if you’re building the next hot dating app, that doesn’t really lend much credence to why you’re uniquely qualified for this particular product.

An ideal Management Team section shows investors that your team’s combination of skills, experience, relationships, and expertise make you the best group of people on the planet to drive the success of your company.

Each team bio should cover:

The team member’s name

Their title and position at the company

Their professional background

Any special skills they’ve developed as a result of their past experience

Their role and responsibilities at your company

It’s important to keep team bios focused and to the point: readers don’t need to know where you were born or what your favorite hobbies were growing up. They don’t even necessarily need to know what you studied in undergrad (unless what you studied in undergrad is super-relevant to what they’re doing at your company.)

Aim for around 3-5 sentences of good information on each team member.

12. Funding

Chances are you’re shopping your business plan around to secure capital for your project. If that’s the case , don’t forget to actually ask for the one thing you set out to achieve!

In fact, you’ll want to devote an entire section to your request for funding. This is your opportunity to tell investors:

What your funding goals are

How they can help you achieve those goals

What they have to gain from getting involved in your company

Funding Goal

How much funding do you need to move forward with your goals? How did you arrive at this figure?

What will investors get in exchange for their investment in your company?

Use of Funds

How will you use the funding that you secure from investors? Provide a very basic breakdown, either by amounts or by percentages, of how you plan to allocate the funds you receive. For example:

25%: R&D

25%: Marketing

25%: Product Development

25%: Key Hires

What key milestones will you and your company be able to achieve with the help of this funding?

Why Invest? / Conclusion

Wrap up your Funding section with by driving home why investors should get involved with your company. Is it the experience of your team? The originality of your product? The size of the market? Identify a few key factors that make your company a great opportunity from an investment perspective.

13. Financials

At last, we’ve arrived at everybody’s least favorite section of the business plan: Financials !

Your Financials section comes last after what we’ll call the more “narrative”-driven content that makes up the vast majority of your business plan.

It’s here where you’ll present your various spreadsheets, charts, tables, and graphs that communicate to investors your projections for the company in dollars and cents over the next few years. And while this is a numbers-dominant section, you’ll still want to back-up all of your figures with either a quick intro or summary explaining how you got there.

Because despite the fact that some people underplay financials as merely a guessing game, it’s crucial to remember that investors are looking for estimates, not guesses.

Simply put, you want to build your financial forecasts on a series of assumptions that incorporate as many known parameters as possible. Indicate how you arrived at these assumptions (maybe you compared them against similar products in the market, for example).

Some common elements included in your Financials section are:

Income Statement

A financial statement that showcases your revenues, expenses, and profit for a particular period and whether or not your business is profitable at that point in time.

Balance Sheet

A summary of your business’s net worth at a particular point, breaking it into assets, liabilities, and capital.

Cash Flow Projection

An estimate of the amount of cash that is expected to flow in and out of your business. Your cash flow projection will give you a good idea of how much capital investment you need to secure.

Break-Even Analysis

Just like it sounds, your break-even analysis helps you determine when your total revenue equals your total expenses. In other words, your break-even point. The total profit here equals 0.

If this sounds intimidating, it’s because it kind of is. On the plus side, there are some great online tools available designed to help you create super sleek financials and still maintain your sanity.

We’ve spent time picking apart each core component of a business plan, and as it has probably become abundantly clear, each section is essentially its own in-depth presentation within the overarching plan itself.

While no two business plans will ever be exactly the same, the key takeaway here is that every great plan incorporates the same basic elements that give investors the information they need when determining whether your business idea has legs or not.

Now that you’re ready to roll up your sleeves and finally launch into the writing process , you can refer back to this as you start tailoring these elements to your specific business. If you find yourself getting hung up along the way, check out one of our many other resources on business planning to help you tackle this project head-on!

Karlina Popwell

This article was immensely helpful. Thank you for writing in such a thorough manner. Very grateful!!

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How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

Table of Contents

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

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Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

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11 Key Components of a Business Plan

3 min. read

Updated August 1, 2024

Somebody asked me what the key components of a good business plan were, and I’m glad they did—it’s one of my favorite topics.

It gives me a chance to review and revise another of the lists that I’ve done off and on for years (such as the one from yesterday on  common business plan mistakes ).

• 1. Measure a business plan by the decisions it causes

I’ve written about this one in several places. Like everything else in business, business plans have business objectives.

Does the plan accomplish its objective ? Whether it is better management, accountability, setting stepping stones to the future, convincing somebody to invest, or something else?

Realistically, it doesn’t matter whether your business plan is well-written, complete, well-formatted, creative, or intelligent. It only matters that it does the job it’s supposed to do. It’s a bad plan if it doesn’t.

• 2. Concrete specifics

Dates, deadlines, major milestones, task responsibilities, sales forecasts, spending budgets, and cash flow projections.

Ask yourself how executable it is. Ask yourself how you’ll know, on a regular basis, how much progress you’ve made and whether or not you’re on track.

• 3. Cash flow

Cash flow is the single most important concept in business. A business plan without cash flow is a marketing plan, strategic plan, summary, or something else—and those can be useful, but get your vocabulary right.

A business model, lean canvas, pitch deck, and so on can be useful in some contexts, like raising investment. But those aren’t business plans.

• 4. Realistic

While it is true that all business plans are wrong , assumptions, drivers, deadlines, milestones, and other such details should be realistic, not crazy.

The plan is to be executed. Impossible goals and crazy forecasts make the whole thing a waste of time.

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• 5. Short, sweet, easy-to-read summaries of strategy and tactics

Not all business plans need a lot of text.

The text and explanations are for outsiders, such as investors and bankers; however, many companies ought to use business planning to improve their business operations. If you don’t need the extra information, leave it out.

Define strategy and tactics in short bullet point lists. Tactics, by the way, are related to the marketing plan, product plan, financial plan, and so on. Strategy without tactics is just fluff.

• 6. Alignment of strategy and tactics

It’s surprising how often they don’t match.

Strategy is focus, key target markets , key product/service features, important differentiators, and so forth. Tactics are things like pricing, social media, channels, and financials, and the two should match.

A gourmet restaurant (strategy) should not have a drive-through option (tactics.)

• 7. Covers the event-specific, objective-specific bases

A lot of components of a business plan depend on the usage.

Internal plans have no need for descriptions of company teams. Market analysis hits one level for an internal plan but often has to be proof of market or validation for a plan associated with investment. Investment plans need to know something about exits; internal plans don’t.

• 8. Easy in, easy out

Don’t make anybody work to find what information is where in the plan. Keep it simple.

Use bullets as much as possible, and be careful with naked bullets for people who don’t really know the background. Don’t show off.

• 9. As lean as possible

Just big enough to do the job . It has to be reviewed and revised regularly to be useful. Nothing should be included that isn’t going to be used.

• 10. Geared for change

A good business plan is the opposite of written in stone. It’s going to change in a few weeks.

List assumptions because reviewing assumptions is the best way to determine when to change the plan and when to stick with it.

• 11. The right level of aggregation and summary

It’s not accounting. It’s planning.

Projections look like accounting statements, but they aren’t. They are summarized. They aren’t built on elaborate financial models. They are just detailed enough to generate good information.

• Download a free business plan template

If you want to increase the chances of your business plan checking off everything in this list, then download our free business plan template . Created by experienced entrepreneurs, this template is investor-ready and structured to help you create a useful business plan.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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The 12 Key Components of a Business Plan

There are 12 components of a business plan entrepreneurs must know as they lay out how their business will work.

Entrepreneurs who create business plans are more likely to succeed than those who don’t. 

Not only can a sound plan help your business access investment capital but—as the study found—it can even determine the success or failure of your venture. 

Here are the critical components of a business plan to help you craft your own.

What is a business plan?

A business plan is a document outlining your business goals and your strategies for achieving them. It might include your company’s mission statement , details about your products or services, how you plan to bring them to market, and how much time and money you need to execute the plan. 

For a thorough explanation of how to write a business plan, refer to Shopify’s guide .

12 key components of a business plan

Business plans vary depending on the product or service. Some entrepreneurs choose to use diagrams and charts, while others rely on text alone. Regardless of how you go about it, good business plans tend to include the following elements:

• Executive summary
• Company description
• Market analysis
• Marketing plan
• Competitive analysis 
• Organizational structure
• Products and services
• Operating plan
• Financial plan
• Funding sources

1. Executive summary

The executive summary briefly explains your business’s products or services and why it has the potential to be profitable. You may also include basic information about your company, such as its location and the number of employees.

2. Company description

The company description helps customers, lenders, and potential investors gain a deeper understanding of your product or service. It provides detailed descriptions of your supply chains and explains how your company plans to bring its products or services to market. 

3. Market analysis

The market analysis section outlines your plans to reach your target audience . It usually includes an estimate of the potential demand for the product or service and a summary of market research . 

The market analysis also includes information about marketing strategies, advertising ideas, or other ways of attracting customers. 

Another component of this section is a detailed breakdown of target customers. Many businesses find it helpful to analyze their target market using customer segments , often with demographic data such as age or income. This way, you can customize your marketing plans to reach different groups of customers. 

4. Marketing plan

The marketing plan section details how you plan to attract and retain customers. It covers the marketing mix: product, price, place, and promotion. It shows you understand your market and have clear, measurable goals to guide your marketing strategy.

For example, a fashion retail store might focus on online sales channels, competitive pricing strategies, high-quality products, and aggressive social media promotion.

5. Sales plan

This section focuses on the actions you’ll take to achieve sales targets and drive revenue. It’s different from a marketing plan because it’s more about the direct process of selling the product to your customer. It looks at the methods used from lead generation to closing the sale, as well as revenue targets. 

An ecommerce sales strategy might involve optimizing your online shopping experience, using targeted digital marketing to drive traffic, and employing tactics like flash sales , personalized email marketing, or loyalty programs to boost sales.

6. Competitive analysis

It’s essential that you understand your competitors and distinguish your business. There are two main types of competitors: direct and indirect competitors. 

• Direct competitors. Direct competitors offer the same or similar products and services. For example, the underwear brand Skims is a direct competitor with Spanx .
• Indirect competitors. Indirect competitors, on the other hand, offer different products and services that may satisfy the same customer needs. For example, cable television is an indirect competitor to Netflix.

A competitive analysis explains your business’s unique strengths that give it a competitive advantage over other businesses.

7. Organizational structure

The organizational structure explains your company’s legal structure and provides information about the management team. It also describes the business’s operating plan and details who is responsible for which aspects of the company.

8. Products and services

This component goes in-depth on what you’re actually selling and why it’s valuable to customers. It’ll provide a description of your products and services with all their features, benefits, and unique selling points. It may also discuss the current development stage of your products and plans for the future. 

The products and services section also looks at pricing strategy , intellectual property (IP) rights, and any key supplier information. For example, in an ecommerce business plan focusing on eco-friendly home products, this section would detail the range of products, explain how they are environmentally friendly, outline sourcing and production practices, discuss pricing, and highlight any certifications or eco-labels the products have received.

9. Operating plan

Here is where you explain the day-to-day operations of the business. Your operating plan will cover aspects from production or service delivery to human and resource management. It shows readers how you plan to deliver on your promises. 

For example, in a business plan for a startup selling artisanal crafts, this section would include details on how artisans are sourced, how products are cataloged and stored, the ecommerce platform used for sales, and the logistics for packaging and shipping orders worldwide.

10. Financial plan

The financial plan is one of the most critical parts of the business plan, especially for companies seeking outside funding.

A plan often includes capital expenditure budgets, forecasted income statements , and cash flow statements , which can help predict when your company will become profitable and how it expects to survive in the meantime. 

If your business is already profitable, your financial plan can help with convincing investors of future growth. At the end of the financial section, you may also include a value proposition , which estimates the value of your business.

11. Funding sources

Some businesses planning to expand or to seek funds from venture capitalists may include a section devoted to their long-term growth strategy, including ways to broaden product offerings and penetrate new markets.

12. Appendix

The final component of a business plan is the appendix. Here, you may include additional documents cited in other sections or requested by readers. These might be résumés, financial statements, product pictures, patent approvals, and legal records.

Components of a business plan FAQ

What are 8 common parts of a good business plan.

Some of the most common components of a business plan are an executive summary, a company description, a marketing analysis, a competitive analysis, an organization description, a summary of growth strategies, a financial plan, and an appendix.

What is a business plan format?

A business plan format is a way of structuring a business plan. Shopify offers a free business plan template for startups that you can use to format your business plan.

What are the 5 functions of a business plan?

A business plan explains your company’s products or services, how you expect to make money, the reliability of supply chains, and factors that might affect demand.

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How to make a business plan

How to make a good business plan: step-by-step guide.

A business plan is a strategic roadmap used to navigate the challenging journey of entrepreneurship. It's the foundation upon which you build a successful business.

A well-crafted business plan can help you define your vision, clarify your goals, and identify potential problems before they arise.

But where do you start? How do you create a business plan that sets you up for success?

This article will explore the step-by-step process of creating a comprehensive business plan.

What is a business plan?

A business plan is a formal document that outlines a business's objectives, strategies, and operational procedures. It typically includes the following information about a company:

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

A business plan serves as a roadmap for a company's success and provides a blueprint for its growth and development. It helps entrepreneurs and business owners organize their ideas, evaluate the feasibility, and identify potential challenges and opportunities.

As well as serving as a guide for business owners, a business plan can attract investors and secure funding. It demonstrates the company's understanding of the market, its ability to generate revenue and profits, and its strategy for managing risks and achieving success.

Business plan vs. business model canvas

A business plan may seem similar to a business model canvas, but each document serves a different purpose.

A business model canvas is a high-level overview that helps entrepreneurs and business owners quickly test and iterate their ideas. It is often a one-page document that briefly outlines the following:

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

On the other hand, a Business Plan Template provides a more in-depth analysis of a company's strategy and operations. It is typically a lengthy document and requires significant time and effort to develop.

A business model shouldn’t replace a business plan, and vice versa. Business owners should lay the foundations and visually capture the most important information with a Business Model Canvas Template . Because this is a fast and efficient way to communicate a business idea, a business model canvas is a good starting point before developing a more comprehensive business plan.

A business plan can aim to secure funding from investors or lenders, while a business model canvas communicates a business idea to potential customers or partners.

Why is a business plan important?

A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success.

Here are some of the many benefits of having a thorough business plan.

Helps to define the business goals and objectives

A business plan encourages you to think critically about your goals and objectives. Doing so lets you clearly understand what you want to achieve and how you plan to get there.

A well-defined set of goals, objectives, and key results also provides a sense of direction and purpose, which helps keep business owners focused and motivated.

Guides decision-making

A business plan requires you to consider different scenarios and potential problems that may arise in your business. This awareness allows you to devise strategies to deal with these issues and avoid pitfalls.

With a clear plan, entrepreneurs can make informed decisions aligning with their overall business goals and objectives. This helps reduce the risk of making costly mistakes and ensures they make decisions with long-term success in mind.

Attracts investors and secures funding

Investors and lenders often require a business plan before considering investing in your business. A document that outlines the company's goals, objectives, and financial forecasts can help instill confidence in potential investors and lenders.

A well-written business plan demonstrates that you have thoroughly thought through your business idea and have a solid plan for success.

Identifies potential challenges and risks

A business plan requires entrepreneurs to consider potential challenges and risks that could impact their business. For example:

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

By identifying these potential challenges, entrepreneurs can develop strategies to mitigate risks and overcome challenges. This can reduce the likelihood of costly mistakes and ensure the business is well-positioned to take on any challenges.

Provides a basis for measuring success

A business plan serves as a framework for measuring success by providing clear goals and financial projections . Entrepreneurs can regularly refer to the original business plan as a benchmark to measure progress. By comparing the current business position to initial forecasts, business owners can answer questions such as:

Are we where we want to be at this point?

Did we achieve our goals?

If not, why not, and what do we need to do?

After assessing whether the business is meeting its objectives or falling short, business owners can adjust their strategies as needed.

How to make a business plan step by step

The steps below will guide you through the process of creating a business plan and what key components you need to include.

1. Create an executive summary

Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.

Keep your executive summary concise and clear with the Executive Summary Template . The simple design helps readers understand the crux of your business plan without reading the entire document.

2. Write your company description

Provide a detailed explanation of your company. Include information on what your company does, the mission statement, and your vision for the future.

Provide additional background information on the history of your company, the founders, and any notable achievements or milestones.

3. Conduct a market analysis

Conduct an in-depth analysis of your industry, competitors, and target market. This is best done with a SWOT analysis to identify your strengths, weaknesses, opportunities, and threats. Next, identify your target market's needs, demographics, and behaviors.

Use the Competitive Analysis Template to brainstorm answers to simple questions like:

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

These questions should give you valuable insights into the current market and where your business stands.

4. Describe your products and services

Provide detailed information about your products and services. This includes pricing information, product features, and any unique selling points.

Use the Product/Market Fit Template to explain how your products meet the needs of your target market. Describe what sets them apart from the competition.

5. Design a marketing and sales strategy

Outline how you plan to promote and sell your products. Your marketing strategy and sales strategy should include information about your:

Pricing strategy

Advertising and promotional tactics

Sales channels

The Go to Market Strategy Template is a great way to visually map how you plan to launch your product or service in a new or existing market.

6. Determine budget and financial projections

Document detailed information on your business’ finances. Describe the current financial position of the company and how you expect the finances to play out.

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

Define how your company is structured and who will be responsible for each aspect of the business. Use the Business Organizational Chart Template to visually map the company’s teams, roles, and hierarchy.

As well as the organization and management structure, discuss the legal structure of your business. Clarify whether your business is a corporation, partnership, sole proprietorship, or LLC.

8. Make an action plan

At this point in your business plan, you’ve described what you’re aiming for. But how are you going to get there? The Action Plan Template describes the following steps to move your business plan forward. Outline the next steps you plan to take to bring your business plan to fruition.

Types of business plans

Several types of business plans cater to different purposes and stages of a company's lifecycle. Here are some of the most common types of business plans.

Startup business plan

A startup business plan is typically an entrepreneur's first business plan. This document helps entrepreneurs articulate their business idea when starting a new business.

Not sure how to make a business plan for a startup? It’s pretty similar to a regular business plan, except the primary purpose of a startup business plan is to convince investors to provide funding for the business. A startup business plan also outlines the potential target market, product/service offering, marketing plan, and financial projections.

Strategic business plan

A strategic business plan is a long-term plan that outlines a company's overall strategy, objectives, and tactics. This type of strategic plan focuses on the big picture and helps business owners set goals and priorities and measure progress.

The primary purpose of a strategic business plan is to provide direction and guidance to the company's management team and stakeholders. The plan typically covers a period of three to five years.

Operational business plan

An operational business plan is a detailed document that outlines the day-to-day operations of a business. It focuses on the specific activities and processes required to run the business, such as:

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

The primary purpose of an operational business plan is to ensure that the business runs efficiently and effectively. It helps business owners manage their resources, track their performance, and identify areas for improvement.

Growth-business plan

A growth-business plan is a strategic plan that outlines how a company plans to expand its business. It helps business owners identify new market opportunities and increase revenue and profitability. The primary purpose of a growth-business plan is to provide a roadmap for the company's expansion and growth.

The 3 Horizons of Growth Template is a great tool to identify new areas of growth. This framework categorizes growth opportunities into three categories: Horizon 1 (core business), Horizon 2 (emerging business), and Horizon 3 (potential business).

One-page business plan

A one-page business plan is a condensed version of a full business plan that focuses on the most critical aspects of a business. It’s a great tool for entrepreneurs who want to quickly communicate their business idea to potential investors, partners, or employees.

A one-page business plan typically includes sections such as business concept, value proposition, revenue streams, and cost structure.

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

A template can help you organize your thoughts and effectively communicate your business ideas and strategies. Starting with a template can also save you time and effort when formatting your plan.

Miro’s extensive library of customizable templates includes all the necessary sections for a comprehensive business plan. With our templates, you can confidently present your business plans to stakeholders and investors.

Be practical

Avoid overestimating revenue projections or underestimating expenses. Your business plan should be grounded in practical realities like your budget, resources, and capabilities.

Be specific

Provide as much detail as possible in your business plan. A specific plan is easier to execute because it provides clear guidance on what needs to be done and how. Without specific details, your plan may be too broad or vague, making it difficult to know where to start or how to measure success.

Be thorough with your research

Conduct thorough research to fully understand the market, your competitors, and your target audience . By conducting thorough research, you can identify potential risks and challenges your business may face and develop strategies to mitigate them.

Get input from others

It can be easy to become overly focused on your vision and ideas, leading to tunnel vision and a lack of objectivity. By seeking input from others, you can identify potential opportunities you may have overlooked.

Review and revise regularly

A business plan is a living document. You should update it regularly to reflect market, industry, and business changes. Set aside time for regular reviews and revisions to ensure your plan remains relevant and effective.

Create a winning business plan to chart your path to success

Starting or growing a business can be challenging, but it doesn't have to be. Whether you're a seasoned entrepreneur or just starting, a well-written business plan can make or break your business’ success.

The purpose of a business plan is more than just to secure funding and attract investors. It also serves as a roadmap for achieving your business goals and realizing your vision. With the right mindset, tools, and strategies, you can develop a visually appealing, persuasive business plan.

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8 Components of a Business Plan

Back to Business Plans

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on February 19, 2023

A key part of the business startup process is putting together a business plan , particularly if you’d like to raise capital. It’s not going to be easy, but it’s absolutely essential, and an invaluable learning tool. 

Creating a business plan early helps you think through every aspect of your business, from operations and financing to growth and vision. In the end, the knowledge you’ll gain could be the difference between success and failure. 

But what exactly does a business plan consist of? There are eight essential components, all of which are detailed in this handy guide.

1. Executive Summary 

The executive summary opens your business plan , but it’s the section you’ll write last. It summarizes the key points and highlights the most important aspects of your plan. Often investors and lenders will only read the executive summary; if it doesn’t capture their interest they’ll stop reading, so it’s important to make it as compelling as possible.

The components touched upon should include:

• The business opportunity – what problem are you solving in the market?
• Your idea, meaning the product or service you’re planning to offer, and why it solves the problem in the market better than other solutions.
• The history of the business so far – what have you done to this point? When you’re just getting started, this may be nothing more than coming up with the idea, choosing a business name , and forming a business entity.
• A summary of the industry, market size, your target customers, and the competition.
• A strong statement about how your company is going to stand out in the market – what will be your competitive advantage?
• A list of specific goals that you plan to achieve in the short term, such as developing your product, launching a marketing campaign, or hiring a key person. 
• A summary of your financial plan including cost and sales projections and a break-even analysis.
• A summary of your management team, their roles, and the relevant experience that they have to serve in those roles.
• Your “ask”, if applicable, meaning what you’re requesting from the investor or lender. You’ll include the amount you’d like and how it will be spent, such as “We are seeking $50,000 in seed funding to develop our beta product”. 

Remember that if you’re seeking capital, the executive summary could make or break your venture. Take your time and make sure it illustrates how your business is unique in the market and why you’ll succeed.

The executive summary should be no more than two pages long, so it’s important to capture the reader’s interest from the start. 

• 2. Company Description/Overview

In this section, you’ll detail your full company history, such as how you came up with the idea for your business and any milestones or achievements. 

You’ll also include your mission and vision statements. A mission statement explains what you’d like your business to achieve, its driving force, while a vision statement lays out your long-term plan in terms of growth. 

A mission statement might be “Our company aims to make life easier for business owners with intuitive payroll software”, while a vision statement could be “Our objective is to become the go-to comprehensive HR software provider for companies around the globe.”

In this section, you’ll want to list your objectives – specific short-term goals. Examples might include “complete initial product development by ‘date’” or “hire two qualified sales people” or “launch the first version of the product”. 

It’s best to divide this section into subsections – company history, mission and vision, and objectives.

3. Products/Services Offered 

Here you’ll go into detail about what you’re offering, how it solves a problem in the market, and how it’s unique. Don’t be afraid to share information that is proprietary – investors and lenders are not out to steal your ideas. 

Also specify how your product is developed or sourced. Are you manufacturing it or does it require technical development? Are you purchasing a product from a manufacturer or wholesaler? 

You’ll also want to specify how you’ll sell your product or service. Will it be a subscription service or a one time purchase?  What is your target pricing? On what channels do you plan to sell your product or service, such as online or by direct sales in a store? 

Basically, you’re describing what you’re going to sell and how you’ll make money.

• 4. Market Analysis 

The market analysis is where you’re going to spend most of your time because it involves a lot of research. You should divide it into four sections.

Industry analysis 

You’ll want to find out exactly what’s happening in your industry, such as its growth rate, market size, and any specific trends that are occurring. Where is the industry predicted to be in 10 years? Cite your sources where you can by providing links. 

Then describe your company’s place in the market. Is your product going to fit a certain niche? Is there a sub-industry your company will fit within? How will you keep up with industry changes? 

Competitor analysis 

Now you’ll dig into your competition. Detail your main competitors and how they differentiate themselves in the market. For example, one competitor may advertise convenience while another may tout superior quality. Also highlight your competitors’ weaknesses.

Next, describe how you’ll stand out. Detail your competitive advantages and how you’ll sustain them. This section is extremely important and will be a focus for investors and lenders. 

Target market analysis 

Here you’ll describe your target market and whether it’s different from your competitors’.  For example, maybe you have a younger demographic in mind? 

You’ll need to know more about your target market than demographics, though. You’ll want to explain the needs and wants of your ideal customers, how your offering solves their problem, and why they will choose your company. 

You should also lay out where you’ll find them, where to place your marketing and where to sell your products. Learning this kind of detail requires going to the source – your potential customers. You can do online surveys or even in-person focus groups. 

Your goal will be to uncover as much about these people as possible. When you start selling, you’ll want to keep learning about your customers. You may end up selling to a different target market than you originally thought, which could lead to a marketing shift. 

SWOT analysis 

SWOT stands for strengths, weaknesses, opportunities, and threats, and it’s one of the more common and helpful business planning tools.   

First describe all the specific strengths of your company, such as the quality of your product or some unique feature, such as the experience of your management team. Talk about the elements that will make your company successful.

Next, acknowledge and explore possible weaknesses. You can’t say “none”, because no company is perfect, especially at the start. Maybe you lack funds or face a massive competitor. Whatever it is, detail how you will surmount this hurdle. 

Next, talk about the opportunities your company has in the market. Perhaps you’re going to target an underserved segment, or have a technology plan that will help you surge past the competition. 

Finally, examine potential threats. It could be a competitor that might try to replicate your product or rapidly advancing technology in your industry. Again, discuss your plans to handle such threats if they come to pass. 

5. Marketing and Sales Strategies

Now it’s time to explain how you’re going to find potential customers and convert them into paying customers.  

Marketing and advertising plan

When you did your target market analysis, you should have learned a lot about your potential customers, including where to find them. This should help you determine where to advertise. 

Maybe you found that your target customers favor TikTok over Instagram and decided to spend more marketing dollars on TikTok. Detail all the marketing channels you plan to use and why.

Your target market analysis should also have given you information about what kind of message will resonate with your target customers. You should understand their needs and wants and how your product solves their problem, then convey that in your marketing. 

Start by creating a value proposition, which should be no more than two sentences long and answer the following questions:

• What are you offering
• Whose problem does it solve
• What problem does it solve
• What benefits does it provide
• How is it better than competitor products

An example might be “Payroll software that will handle all the payroll needs of small business owners, making life easier for less.”

Whatever your value proposition, it should be at the heart of all of your marketing.

Sales strategy and tactics 

Your sales strategy is a vision to persuade customers to buy, including where you’ll sell and how. For example, you may plan to sell only on your own website, or you may sell from both a physical location and online. On the other hand, you may have a sales team that will make direct sales calls to potential customers, which is more common in business-to-business sales.

Sales tactics are more about how you’re going to get them to buy after they reach your sales channel. Even when selling online, you need something on your site that’s going to get them to go from a site visitor to a paying customer. 

By the same token, if you’re going to have a sales team making direct sales, what message are they going to deliver that will entice a sale? It’s best for sales tactics to focus on the customer’s pain point and what value you’re bringing to the table, rather than being aggressively promotional about the greatness of your product and your business. 

Pricing strategy

Pricing is not an exact science and should depend on several factors. First, consider how you want your product or service to be perceived in the market. If your differentiator is to be the lowest price, position your company as the “discount” option. Think Walmart, and price your products lower than the competition. 

If, on the other hand, you want to be the Mercedes of the market, then you’ll position your product as the luxury option. Of course you’ll have to back this up with superior quality, but being the luxury option allows you to command higher prices.

You can, of course, fall somewhere in the middle, but the point is that pricing is a matter of perception. How you position your product in the market compared to the competition is a big factor in determining your price.

Of course, you’ll have to consider your costs, as well as competitor prices. Obviously, your prices must cover your costs and allow you to make a good profit margin. 

Whatever pricing strategy you choose, you’ll justify it in this section of your plan.

• 6. Operations and Management 

This section is the real nuts and bolts of your business – how it operates on a day-to-day basis and who is operating it. Again, this section should be divided into subsections.

Operational plan

Your plan of operations should be specific , detailed and mainly logistical. Who will be doing what on a daily, weekly, and monthly basis? How will the business be managed and how will quality be assured? Be sure to detail your suppliers and how and when you’ll order raw materials. 

This should also include the roles that will be filled and the various processes that will be part of everyday business operations . Just consider all the critical functions that must be handled for your business to be able to operate on an ongoing basis. 

Technology plan

If your product involves technical development, you’ll describe your tech development plan with specific goals and milestones. The plan will also include how many people will be working on this development, and what needs to be done for goals to be met.

If your company is not a technology company, you’ll describe what technologies you plan to use to run your business or make your business more efficient. It could be process automation software, payroll software, or just laptops and tablets for your staff. 

Management and organizational structure 

Now you’ll describe who’s running the show. It may be just you when you’re starting out, so you’ll detail what your role will be and summarize your background. You’ll also go into detail about any managers that you plan to hire and when that will occur.

Essentially, you’re explaining your management structure and detailing why your strategy will enable smooth and efficient operations. 

Ideally, at some point, you’ll have an organizational structure that is a hierarchy of your staff. Describe what you envision your organizational structure to be. 

Personnel plan 

Detail who you’ve hired or plan to hire and for which roles. For example, you might have a developer, two sales people, and one customer service representative.

Describe each role and what qualifications are needed to perform those roles. 

• 7. Financial Plan 

Now, you’ll enter the dreaded world of finance. Many entrepreneurs struggle with this part, so you might want to engage a financial professional to help you. A financial plan has five key elements.

Startup Costs

Detail in a spreadsheet every cost you’ll incur before you open your doors. This should determine how much capital you’ll need to launch your business. 

Financial projections 

Creating financial projections, like many facets of business, is not an exact science. If your company has no history, financial projections can only be an educated guess. 

First, come up with realistic sales projections. How much do you expect to sell each month? Lay out at least three years of sales projections, detailing monthly sales growth for the first year, then annually thereafter. 

Calculate your monthly costs, keeping in mind that some costs will grow along with sales. 

Once you have your numbers projected and calculated, use them to create these three key financial statements: 

• Profit and Loss Statement , also known as an income statement. This shows projected revenue and lists all costs, which are then deducted to show net profit or loss. 
• Cash Flow Statement. This shows how much cash you have on hand at any given time. It will have a starting balance, projections of cash coming in, and cash going out, which will be used to calculate cash on hand at the end of the reporting period.
• Balance Sheet. This shows the net worth of the business, which is the assets of the business minus debts. Assets include equipment, cash, accounts receivables, inventory, and more. Debts include outstanding loan balances and accounts payable.

You’ll need monthly projected versions of each statement for the first year, then annual projections for the following two years.

Break-even analysis

The break-even point for your business is when costs and revenue are equal. Most startups operate at a loss for a period of time before they break even and start to make a profit. Your break-even analysis will project when your break-even point will occur, and will be informed by your profit and loss statement. 

Funding requirements and sources 

Lay out the funding you’ll need, when, and where you’ll get it. You’ll also explain what those funds will be used for at various points. If you’re in a high growth industry that can attract investors, you’ll likely need various rounds of funding to launch and grow. 

Key performance indicators (KPIs)

KPIs measure your company’s performance and can determine success. Many entrepreneurs only focus on the bottom line, but measuring specific KPIs helps find areas of improvement. Every business has certain crucial metrics. 

If you sell only online, one of your key metrics might be your visitor conversion rate. You might do an analysis to learn why just one out of ten site visitors makes a purchase. 

Perhaps the purchase process is too complicated or your product descriptions are vague. The point is, learning why your conversion rate is low gives you a chance to improve it and boost sales. 

8. Appendices

In the appendices, you can attach documents such as manager resumes or any other documents that support your business plan.

As you can see, a business plan has many components, so it’s not an afternoon project. It will likely take you several weeks and a great deal of work to complete. Unless you’re a finance guru, you may also want some help from a financial professional. 

Keep in mind that for a small business owner, there may be no better learning experience than writing a detailed and compelling business plan. It shouldn’t be viewed as a hassle, but as an opportunity! 

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10 Essential Components of a Business Plan and How to Write Them

Business Plan Template

• July 15, 2024

13 Min Read

Entrepreneurs who write a business plan are 16% more likely to achieve business viability than those who don’t.

More and more entrepreneurs are realizing this and are choosing to write a business plan that corresponds with their vision.

Whether you are writing a lean plan or a detailed comprehensive plan—it must touch certain key points to aid in strategic decision-making and goal achievement.

Well, this blog post is here to help you. It talks about the 10 Business Plan Components that are quintessential for most plans.

So without beating around the bush, let’s dive right in.

10 Important Business Plan Components

Let’s now understand the key components that make a sound business plan.

1. Executive summary

The executive summary is one of the most important parts of a business plan. It’s the first thing potential investors will read and should therefore provide a clear overview of your business and its goals.

In other words, it helps the reader get a better idea of what to expect from your company. So, when writing an executive summary of your business, don’t forget to mention your mission and vision statement.

Mission statement

A mission statement is a brief statement that outlines your business objectives and what you want to achieve. It acts as a guiding principle that informs decisions and provides a clear direction for the organization to follow.

For instance, Google’s mission is to “organize the world’s information and make it universally accessible and useful.” It’s short, inspiring, and immediately communicates what the company does.

A mission statement should be realistic, and hint towards a goal that is achievable in a reasonable amount of time with the resources you currently have or are going to acquire in the near future.

Vision statement

While a mission statement is more actionable and has an immediate effect on the daily activities of the company, a vision statement is more aspirational and has a much broader scope.

In other words, it highlights where the company aims to go in the future and the positive change it hopes to make in the world within its lifetime.

2. Company description

The second component of your business plan is the company description. Here, you provide a brief overview of your company, its products or services, and its history. You can also add any notable achievements if they are significant enough for an investor to know.

A company overview offers a quick bird’s-eye view of things such as your business model, operational capabilities, financials, business philosophy, size of the team, code of conduct, and short-term and long-term objectives.

Products and services

The products and services part of your company description explains what your business offers to its customers, how it’s delivered, and the costs involved in acquiring new customers and executing a sale.

Company history

Company history is the timeline of important events for your business from its origin to the present day. It includes a brief profile of the founder(s) and their background, the date the company was founded, any notable achievements and milestones, and other similar facts and details.

If you’re a startup, you’ll probably not have much of a history to write about. In that case, you can share stories of the challenges your startup faced during its inception and how your team overcame them.

3. Market analysis

The market analysis section of your business plan provides an in-depth analysis of the industry, target market, and competition. It should underline the risks and opportunities associated with your industry, and also comment on the attributes of your target customer.

Demographics and segmentation

Understanding the demographics of your customers plays a big role in how well you’re able to identify their traits and serve them.

By dividing your target audience into smaller and more manageable groups, you can tailor your services and products to better meet their needs.

You can use demographics such as age, gender, income, location, ethnicity, and education level to better understand the preferences and behaviors of each segment, and use that data to create more effective marketing strategies.

Target market and size

Understanding your target market lies at the core of all your marketing endeavors. After all, if you don’t have a clear idea of who you’re serving, you won’t be able to serve well no matter how big your budget is.

For instance, Starbucks’ primary target market includes working professionals and office workers. The company has positioned itself such that many of its customers start their day with its coffee.

Estimating the market size helps you know how much scope there is to scale your business in the future. In other words, you’re trying to determine how much potential revenue exists in this market and if it’s worth the investment.

Market need

The next step is to figure out the market need, i.e., the prevalent pain points that people in that market experience. The easiest way to find these pain points is to read the negative reviews people leave on Amazon for products that are similar to yours.

The better your product solves those pain points, the better your chances of capturing that market. In addition, since your product is solving a problem that your rivals can’t, you can also charge a premium price.

To better identify the needs of your target customers, it helps to take into account things such as local cultural values, industry trends, buying habits, tastes and preferences, price elasticity, and more.

4. Product Summary

The product summary section of your business plan goes into detail about the features and benefits that your products and services offer, and how they differ from your competitors. It also outlines the manufacturing process, pricing, cost of production, inventory, packaging, and capital requirements.

5. Competitive analysis

Unless you’ve discovered an untapped market, you’re probably going to face serious competition and it’s only going to increase as you scale your business later down the line.

This is where the competitive analysis section helps. It gives an overview of the competitive landscape, introduces your direct and indirect competitors, and highlights their strengths and market share.

In such an environment, it helps to have certain competitive advantages against your rivals so you can stand out in the market.

Simply put, a competitive advantage is the additional value you can provide to your customers that your rivals can’t—perhaps via unique product features, excellent customer service, or more.

Want to Perform Competitive Analysis for Your Business?

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6. Marketing and sales plan

The marketing and sales plan is one of the most important business plan components. It explains how you plan to penetrate the market, position your brand in the minds of the buyers, build brand loyalty, increase sales, and remain competitive in an ever-changing business environment.

Unique selling proposition

A unique selling proposition (USP) conveys how your products and services differ from those of your competitors, and the added value those differences provide.

A strong USP will stand out in a competitive market and make potential customers more likely to switch to your brand—essentially capturing the market share of your rivals.

Marketing Plan

Your product might be unique, but if people don’t even know that it exists, it won’t sell. That’s where marketing comes in.

A marketing plan outlines strategies for reaching your target market and achieving sales goals. It also outlines the budget required for advertising and promotion.

You may also include data on the target market, target demographics, objectives, strategies, a timeline, budget, and the metrics considered for evaluating success.

Sales and distribution plan

Once people are made aware of your product, the next step is to ensure it reaches them. This means having a competent sales and distribution plan and a strong supply chain.

Lay out strategies for reaching potential customers, such as online marketing, lead generation, retail distribution channels, or direct sales.

Your goal here is to minimize sales costs and address the risks involved with the distribution of your product. If you’re selling ice cream, for example, you would have to account for the costs of refrigeration and cold storage.

Pricing strategy

Pricing is a very sensitive yet important part of any business. When creating a pricing strategy , you need to consider factors such as market demand, cost of production, competitor prices, disposable income of target customers, and profitability goals.

Some businesses have a small profit margin but sell large volumes of their product, while others sell fewer units but with a massive markup. You will have to decide for yourself which approach you want to follow.

Before setting your marketing plans into action, you need a budget for them. This means writing down how much money you’ll need, how it will be used, and the potential return you are estimating on this investment.

A budget should be flexible, meaning that it should be open to changes as the market shifts and customer behavior evolves. The goal here is to make sure that the company is making the best use of its resources by minimizing the wastage of funds.

7. Operations plan

The operations plan section of your business plan provides an overview of how the business is run and its day-to-day operations. This section is especially important for manufacturing businesses.

It includes a description of your business structure, the roles and responsibilities of each team member, the resources needed, and the procedures you will use to ensure the smooth functioning of your business. The goal here is to maximize output whilst minimizing the wastage of raw material or human labor.

8. Management team

At the core of any successful business lies a dedicated, qualified, and experienced management team overlooking key business activities.

This section provides an overview of the key members of your management team including their credentials, professional background, roles and responsibilities, experience, and qualifications.

A lot of investors give special attention to this section as it helps them ascertain the competence and work ethic of the members involved.

Organizational structure

An organizational structure defines the roles, responsibilities, decision-making processes, and authority of each individual or department in an organization.

Having a clear organizational structure improves communication, increases efficiency, promotes collaboration, and makes it easier to delegate tasks.

Startups usually have a flatter organizational hierarchy whereas established businesses have a more traditional structure of power and authority.

9. Financial Plan

Financials are usually the least fun thing to talk about, but they are important nonetheless as they provide an overview of your current financial position, capital requirements, projections, and plans for repayment of any loans.

A financial plan mainly includes detailed financial statements and a funding overview. Let’s check these components.

Financial Statements

A business plan should include detailed financial projections for the next couple of years. An investor would likely require an income statement, cash flow statement, balance sheet, and break-even analysis to understand the profitability, growth, and revenue of your business.

Along with your financial statements, you should also include an analysis of your startup costs, operating and administration costs, and forecasted sales.

Present these statements visually to make your financial plan easy to digest.

Funding requirements

Once an investor has read through your business plan, it’s time to request funding. Investors will want to see an accurate and detailed breakdown of the funds required and an explanation of why the requested funds are necessary for the operation and expansion of your business.

10. Appendix

The appendix is the last section of your business plan that includes additional supporting documents such as resumes of key team members, market research documents, financial statements, and legal documents.

In other words, anything important or relevant that couldn’t fit in any of the former sections of your business plan goes in the appendix.

And those are the essential business plan components you need to include in your plan.

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A well-written business plan is an asset that navigates the business risks, optimizes the business strategies, and serves as a roadmap to help you achieve your business objectives.

Think about it and you will realize that the benefits of having a detailed business plan are ample. However, writing a business plan that covers these essential components and that too from scratch is a bit excessive.

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Frequently Asked Questions

How do you conduct a market analysis for a business plan.

To conduct market analysis, determine your industry and market size. Identify the emerging trends in your industry and the challenges that may arise. Analyze the market need and define your target audience by creating a buyer’s persona.

Competitors analysis is also a part of market analysis for which you will conduct a SWOT analysis of your top competitors.

Where can I find help writing a business plan?

You can use online business planning tools like Upmetrics , Bizplan, and even websites like SBA (Small Business Administration) to get resources and templates for writing a business plan.

What information is needed for the organization and management structure section?

To write your organization and management structure, you need a detailed overview of the people who would run your business. This includes people at the top, managerial positions, and administrative roles.

You also need an outline of organizational hierarchy and the flow of responsibilities and roles in your organization.

What should be included in a funding request section?

The funding section of business plans should outline your funding demand and explain your plans to utilize that fund. It should also include your repayment plan to help investors and banks evaluate your funding request.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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8 Things You Need in a Business Plan

The Harvard Business Review says a good business plan is super important for entrepreneurs. It’s like a guide for them in the tricky world of business. The plan has different parts, and each part is like a piece of the puzzle for success.

For example, there’s the short and powerful Executive Summary that tells the most important things about the business. Then, there’s the smart Market Analysis that helps you understand what customers want.

All of these parts work together to make a strong plan. So, let’s take a closer look at these important pieces that help turn business dreams into successful reality.

What is a business plan?

A business plan is a detailed document that explains how a business works and what it aims to achieve. It outlines the business’s goals, strategies , and resources. It’s like a roadmap for the business, helping it stay on course and navigate challenges.

 The plan typically includes sections about the business’s description , market research , marketing and sales strategies, operations, management, and financial projections .

 Entrepreneurs use it to clarify their vision, secure funding, and measure progress. It’s a crucial tool for anyone starting or running a business, helping them make informed decisions and work toward success.

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Eight Key Components of Business Plans

Crafting a business plan is akin to laying the foundation for a grand architectural masterpiece. It’s your roadmap to success, a strategic blueprint that breathes life into your entrepreneurial dreams. Allow me to take you on a journey through the essential components of this vital document.

• Executive Summary
• Business Description
• Market Analysis
• Marketing and Sales Strategy
• Operations Plan
• Management and Organization
• Financial Plan

1. Executive Summary

Picture this as the dazzling opening act of your business plan, where you showcase your vision, mission, and why your venture is destined for greatness. It’s a compelling glimpse into the heart and soul of your business.

It’s like a short summary of your business, including what it does and what makes it special.

• Advice: Keep it concise and engaging. Think of it as a teaser that makes people want to read more. Highlight what makes your business unique.

2. Business Description

Here, we dive deep into the DNA of your business. You’ll spill the beans on what you do, your industry, your history, and your grand plans for the future. It’s a snapshot that captures the essence of your business.

This part explains your business in detail, like what it sells, the industry it’s in, and its history.

• Advice: Be clear about what your business does and why it matters. Describe your industry and explain how your business fits into it.

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3. Market Analysis

This section is where we turn detective. We unearth market trends, study customer behaviors, and dissect your competitors. It’s a treasure trove of insights that helps you navigate the marketplace.

Here, you look at the market your business is in. You study things like customer behavior and what other businesses are doing.

• Advice: Research thoroughly. Understand your customers’ needs and your competition. Show that you know your market inside and out.

4. Marketing and Sales Strategy

Imagine this as the stage where you reveal your magic tricks. Here, you outline how you’ll entice and retain your customers. It’s where the art of attracting and selling meets strategy.

This section talks about how you’ll get customers and sell your products or services.

• Advice: Outline your plan for attracting customers and selling your products or services. Focus on how you’ll reach your target audience and convince them to buy from you.

5. Operations Plan

Ever wondered how the show runs backstage? This is where you spill the beans. From location to logistics, it’s the nitty-gritty of daily operations. It’s the backbone that keeps your business standing tall.

It’s about how your business will work day-to-day, like where you’ll be located and how you’ll make your products.

Advice: Detail how your business will operate day-to-day. Discuss your location, equipment, suppliers, and how you’ll ensure quality.

6. Management and Organization

Introducing the cast and crew of your business. Who’s in charge? What’s their expertise? It’s where you showcase your dream team and the hierarchy that keeps everything in check.

This part introduces the people running the business and how it’s organized.

• Advice: Introduce your team and their qualifications. Explain who’s in charge and how your business is structured.

7. Financial Plan

This section is your crystal ball into the future. It predicts your financial performance, balances your books, and forecasts cash flows. Investors love it, and you will too.

It’s like a prediction of how much money your business will make and spend in the future.

Advice: Be realistic with your financial projections. Include income, expenses, and cash flow predictions. Show how you’ll make a profit.

8. Appendix

This is your secret stash. All those extra documents, licenses, contracts, and accolades find their home here. It’s the vault of credibility that adds weight to your plan.

This is where you put extra documents like licenses, contracts, and other important stuff.

• Advice: Use this section for supporting documents. Include licenses, contracts, and anything that adds credibility to your plan.

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Remember, your business plan isn’t set in stone. It’s a living, breathing document that evolves with your journey. It’s your guiding star, your go-to reference, and your pitch to investors, all rolled into one.

With a well-crafted business plan, you’re equipped to clarify your vision, rally support from investors, and steer your venture to success. So, let’s get started on your masterpiece!

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The 10 Key Components of a Business Plan

Written by Dave Lavinsky

Over the past 20+ years, we have helped over 1 million entrepreneurs and business owners write business plans. These plans have been used to raise funding and grow countless businesses.

Download our Ultimate Business Plan Template here >

From working with all these businesses, we know what the 10 elements in any great business plan. Providing a comprehensive assessment of each of these components is critical in attracting lenders, angel investors, venture capitalists or other equity investors.

Get started with a title page that includes your company name, logo and contact information, since interested readers must have a simple way to find and reach out to you. After that be sure to include the 10 parts of a business plan documented below.

What are the 10 Key Components of a Business Plan?

The 10 sections or elements of a business plan that you must include are as follows:

1. Executive Summary

The executive summary provides a succinct synopsis of the business plan, and highlights the key points raised within. It often includes the company’s mission statement and description of the products and services. It’s recommended by me and many experts including the Small Business Administration to write the executive summary last.

The executive summary must communicate to the prospective investor the size and scope of the market opportunity, the venture’s business and profitability model, and how the resources/skills/strategic positioning of the company’s management team make it uniquely qualified to execute the business plan. The executive summary must be compelling, easy-to-read, and no longer than 2-4 pages.  

2. Company Analysis

This business plan section provides a strategic overview of the business and describes how the company is organized, what products and services it offers/will offer, and goes into further detail on the business’ unique qualifications in serving its target markets. As any good business plan template will point out, your company analysis should also give a snapshot of the company’s achievements to date, since the best indicator of future success are past accomplishments.

3. Industry or Market Analysis

This section evaluates the playing field in which the company will be competing, and includes well-structured answers to key market research questions such as the following:

• What are the sizes of the target market segments?
• What are the trends for the industry as a whole?
• With what other industries do your services compete?

To conduct this market research, do research online and leverage trade associations that often have the information you need.  

4. Analysis of Customers

The customer analysis business plan section assesses the customer segment(s) that the company serves. In this section, the company must convey the needs of its target customers. It must then show how its products and services satisfy these needs to an extent that the customer will pay for them.

The following are examples of customer segments: moms, engaged couples, schools, online retailers, teens, baby boomers, business owners, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of business you operate as different segments often have different needs. Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations and income levels of the customers you seek to serve. With regards to psychographic variables, discuss whether your customers have any unique lifestyles, interests, opinions, attitudes and/or values that will help you market to them more effectively.

5. Analysis of Competition

All capable business plan writers discuss the competitive landscape of your business. This element of your plan must identify your direct and indirect competitors, assesses their strengths and weaknesses and delineate your company’s competitive advantages. It’s a crucial business plan section.

Direct competitors are those that provide the same product or service to the same customer. Indirect competitors are those who provide similar products or services. For example, the direct competitors to a pizza shop are other local pizza shops. Indirect competitors are other food options like supermarkets, delis, other restaurants, etc.

The first five components of your business plan provide an overview of the business opportunity and market research to support it. The remaining five business plan sections focus mainly on strategy, primarily the marketing, operational, financial and management strategies that your firm will employ.

6. Marketing, Sales & Product Plan

The marketing and sales plan component of your business plan details your strategy for penetrating the target markets. Key elements include the following:

• A description of the company’s desired strategic positioning
• Detailed descriptions of the company’s product and service offerings and potential product extensions
• Descriptions of the company’s desired image and branding strategy
• Descriptions of the company’s promotional strategies
• An overview of the company’s pricing strategies
• A description of current and potential strategic marketing partnerships/ alliances

7. Operations Strategy, Design and Development Plans

These sections detail the internal strategies for building the venture from concept to reality, and include answers to the following questions:

• What functions will be required to run the business?
• What milestones must be reached before the venture can be launched?
• How will quality be controlled?

8. Management Team

The management team section demonstrates that the company has the required human resources to be successful. The business plan must answer questions including:

• Who are the key management personnel and what are their backgrounds?
• What management additions will be required to make the business a success?
• Who are the other investors and/or shareholders, if any?
• Who comprises the Board of Directors and/or Board of Advisors?
• Who are the professional advisors (e.g., lawyer, accounting firm)?

9. Financial Plan

The financial plan involves the development of the company’s revenue and profitability model. These financial statements detail how you generate income and get paid from customers,. The financial plan includes detailed explanations of the key assumptions used in building the business plan model, sensitivity analysis on key revenue and cost variables, and description of comparable valuations for existing companies with similar business models.

One of the key purposes of your business plan is to determine the amount of capital the firm needs. The financial plan does this along with assessing the proposed use of these funds (e.g., equipment, working capital, labor expenses, insurance costs, etc.) and the expected future earnings. It includes Projected Income Statements, Balance Sheets (showing assets, liabilities and equity) and Cash Flow Statements, broken out quarterly for the first two years, and annually for years 1-5.

Importantly, all of the assumptions and projections in the financial plan must flow from and be supported by the descriptions and explanations offered in the other sections of the plan. The financial plan is where the entrepreneur communicates how he/she plans to “monetize” the overall vision for the new venture. Note that in addition to traditional debt and equity sources of startup and growth funding that require a business plan (bank loans, angel investors, venture capitalists, friends and family), you will probably also use other capital sources, such as credit cards and business credit, in growing your company.

10. Appendix

The appendix is used to support the rest of the business plan. Every business plan should have a full set of financial projections in the appendix, with the summary of these financials in the executive summary and the financial plan. Other documentation that could appear in the appendix includes technical drawings, partnership and/or customer letters, expanded competitor reviews and/or customer lists.

Find additional business plan help articles here.

Expertly and comprehensively discussing these components in their business plan helps entrepreneurs to better understand their business opportunity and assists them in convincing investors that the opportunity may be right for them too.

In addition to ensuring you included the proper elements of a business plan when developing your plan always think about why you are uniquely qualified to succeed in your business. For example, is your team’s expertise something that’s unique and can ensure your success? Or is it marketing partnerships you have executed? Importantly, if you don’t have any unique success factors, think about what you can add to make your company unique. Doing so can dramatically improve your success. Also, whether you write it on a word processor or use business plan software , remember to update your plan at least annually. After several years, you should have several business plans you can review to see what worked and what didn’t. This should prove helpful as you create future plans for your company’s growth.

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Other Helpful Business Plan Articles & Templates

Business Plan Example and Template

Learn how to create a business plan

What is a Business Plan?

A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing .

A business plan should follow a standard format and contain all the important business plan elements. Typically, it should present whatever information an investor or financial institution expects to see before providing financing to a business.

Contents of a Business Plan

A business plan should be structured in a way that it contains all the important information that investors are looking for. Here are the main sections of a business plan:

1. Title Page

The title page captures the legal information of the business, which includes the registered business name, physical address, phone number, email address, date, and the company logo.

2. Executive Summary

The executive summary is the most important section because it is the first section that investors and bankers see when they open the business plan. It provides a summary of the entire business plan. It should be written last to ensure that you don’t leave any details out. It must be short and to the point, and it should capture the reader’s attention. The executive summary should not exceed two pages.

3. Industry Overview

The industry overview section provides information about the specific industry that the business operates in. Some of the information provided in this section includes major competitors, industry trends, and estimated revenues. It also shows the company’s position in the industry and how it will compete in the market against other major players.

4. Market Analysis and Competition

The market analysis section details the target market for the company’s product offerings. This section confirms that the company understands the market and that it has already analyzed the existing market to determine that there is adequate demand to support its proposed business model.

Market analysis includes information about the target market’s demographics , geographical location, consumer behavior, and market needs. The company can present numbers and sources to give an overview of the target market size.

A business can choose to consolidate the market analysis and competition analysis into one section or present them as two separate sections.

5. Sales and Marketing Plan

The sales and marketing plan details how the company plans to sell its products to the target market. It attempts to present the business’s unique selling proposition and the channels it will use to sell its goods and services. It details the company’s advertising and promotion activities, pricing strategy, sales and distribution methods, and after-sales support.

6. Management Plan

The management plan provides an outline of the company’s legal structure, its management team, and internal and external human resource requirements. It should list the number of employees that will be needed and the remuneration to be paid to each of the employees.

Any external professionals, such as lawyers, valuers, architects, and consultants, that the company will need should also be included. If the company intends to use the business plan to source funding from investors, it should list the members of the executive team, as well as the members of the advisory board.

7. Operating Plan

The operating plan provides an overview of the company’s physical requirements, such as office space, machinery, labor, supplies, and inventory . For a business that requires custom warehouses and specialized equipment, the operating plan will be more detailed, as compared to, say, a home-based consulting business. If the business plan is for a manufacturing company, it will include information on raw material requirements and the supply chain.

8. Financial Plan

The financial plan is an important section that will often determine whether the business will obtain required financing from financial institutions, investors, or venture capitalists. It should demonstrate that the proposed business is viable and will return enough revenues to be able to meet its financial obligations. Some of the information contained in the financial plan includes a projected income statement , balance sheet, and cash flow.

9. Appendices and Exhibits

The appendices and exhibits part is the last section of a business plan. It includes any additional information that banks and investors may be interested in or that adds credibility to the business. Some of the information that may be included in the appendices section includes office/building plans, detailed market research , products/services offering information, marketing brochures, and credit histories of the promoters.

Business Plan Template

Here is a basic template that any business can use when developing its business plan:

Section 1: Executive Summary

• Present the company’s mission.
• Describe the company’s product and/or service offerings.
• Give a summary of the target market and its demographics.
• Summarize the industry competition and how the company will capture a share of the available market.
• Give a summary of the operational plan, such as inventory, office and labor, and equipment requirements.

Section 2: Industry Overview

• Describe the company’s position in the industry.
• Describe the existing competition and the major players in the industry.
• Provide information about the industry that the business will operate in, estimated revenues, industry trends, government influences, as well as the demographics of the target market.

Section 3: Market Analysis and Competition

• Define your target market, their needs, and their geographical location.
• Describe the size of the market, the units of the company’s products that potential customers may buy, and the market changes that may occur due to overall economic changes.
• Give an overview of the estimated sales volume vis-à-vis what competitors sell.
• Give a plan on how the company plans to combat the existing competition to gain and retain market share.

Section 4: Sales and Marketing Plan

• Describe the products that the company will offer for sale and its unique selling proposition.
• List the different advertising platforms that the business will use to get its message to customers.
• Describe how the business plans to price its products in a way that allows it to make a profit.
• Give details on how the company’s products will be distributed to the target market and the shipping method.

Section 5: Management Plan

• Describe the organizational structure of the company.
• List the owners of the company and their ownership percentages.
• List the key executives, their roles, and remuneration.
• List any internal and external professionals that the company plans to hire, and how they will be compensated.
• Include a list of the members of the advisory board, if available.

Section 6: Operating Plan

• Describe the location of the business, including office and warehouse requirements.
• Describe the labor requirement of the company. Outline the number of staff that the company needs, their roles, skills training needed, and employee tenures (full-time or part-time).
• Describe the manufacturing process, and the time it will take to produce one unit of a product.
• Describe the equipment and machinery requirements, and if the company will lease or purchase equipment and machinery, and the related costs that the company estimates it will incur.
• Provide a list of raw material requirements, how they will be sourced, and the main suppliers that will supply the required inputs.

Section 7: Financial Plan

• Describe the financial projections of the company, by including the projected income statement, projected cash flow statement, and the balance sheet projection.

Section 8: Appendices and Exhibits

• Quotes of building and machinery leases
• Proposed office and warehouse plan
• Market research and a summary of the target market
• Credit information of the owners
• List of product and/or services

Related Readings

Thank you for reading CFI’s guide to Business Plans. To keep learning and advancing your career, the following CFI resources will be helpful:

• Corporate Structure
• Three Financial Statements
• Business Model Canvas Examples
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What Are the 4 Important Parts of a Business Plan?

When you're starting a small business, a sound business plan is a critical element you need to secure funding and develop your operational and marketing tactics. While there are several different sections within a business plan, it's critical to focus on the most important ones so that you can guide your business where you want it to go.

The four most important sections of a business plan include your unique value proposition, details about your management team, your market analysis and your financial projections.

The 4 Most Important Elements of a Business Plan

According to the U.S. Small Business Administration, a business plan is like a GPS for your new venture. Without it, you can often feel lost or confused. Taking time to write out a solid business plan helps to cement your ideas and fine tune your tactics. This is a good exercise to do even if you don't need to get funding for your business. A business plan helps entrepreneurs think through their ideas carefully, and provides the next steps they need to take to succeed.

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How to write a strategic plan to raise capital, how to prepare business plans, what are the components of a good business plan, how to write a comprehensive business plan, how to make a business plan for running a dog kennel.

When you're writing a business plan, it's important to consider your audience. In many cases, this includes potential investors, partners or financial institutions. They want to understand why your business is posed to succeed and why you are the person that's going to get it there. As a result, there are four key areas you need to focus on in your business plan, in addition to the rest of its contents:

• The unique value proposition of your business
• The experience, education and successes of your management team
• A detailed market analysis
• A realistic financial projection

Anyone who is looking at your business plan will pay special attention to these four key areas because they summarize your plan for success.

Describe Your Unique Value Proposition

Directly after your executive summary, you need to include a section in your business plan where you describe your company and the products or services you sell. This section should include details on your business structure, legal form and whether you need any special licenses or permits. This practical information is key, according to Entrepreneur, because investors need to see that you have the logistical details in place.

This section is a key element of your business plan because you have the opportunity to showcase what makes your business unique. According to Forbes, it's critical to show how your products and services are different from your competition. For example, do you use a new ingredient that other cafés don't have, or do you have a unique process no one else in the industry knows? These are the types of things you'll need to include in this section of your business plan.

Plus, be sure to outline who your market is. Who are your ideal customers and why will they be interested in what you have to offer? You can provide an overview of your prospects here and delve deeper into it in your market analysis.

Showcase Your Management Team

A most important aspect of a business plan is the management bios. When it comes to small businesses, your successes are interlinked with the company leadership. A business can succeed based on the experience, education and expertise of its owner. Similarly, it may fail if the leadership team makes poor decisions, lacks the proper experience or isn't interested in learning new skills.

As a result, investors and financial institutions will want to know who is heading up your organization. Take some time to write up professional bios of your core management team. This may include the business owner and heads of key departments such as sales, marketing and product development.

The bios should contain previous positions the management team have held and what kind of accolades they have received. Adding quantitative metrics is key, such as a sales manager increasing sales in their last position by 110 percent. If anyone of the leadership team has previous experience starting a business, be sure to highlight this information and provide the successes of that business. You'll also need to point out any skills gaps, and discuss how you plan to fill them with additional resources or outsourced assets, according to Constant Contact.

Conduct a Market Analysis

Another most important component of a business plan is the market analysis. In this key section, you need to cover why this is a viable market from a financial standpoint, according to The Business Plan Shop. This requires a lot of detailed quantitative and qualitative research into your target audience and your competition.

Begin by outlining who your audience is, and provide their demographic, geographic, behavioral and psychographic characteristics. It's important to provide numbers wherever possible to show how big your potential market segment is and whether it can support your business. Be sure to outline what kind of problems or challenges they are experiencing and how your business can solve them.

You'll also need to provide a competitive analysis by reviewing other players in your industry. Provide estimations on how much market share each competitor has and where you have opportunities to take market share from them. This section should also include any barriers to entry. For example, can anyone open up a similar store and take market share away from you?

Provide Financial Statements and Projections

Perhaps the most important part of a business plan, especially for investors, partners and financial institutions, is your financial projections. These show the viability of your business in the years to come, according to Constant Contact. While complicated graphs, charts and spreadsheets can look intimidating, it's important to be familiar with them and be able to talk about them in plain English. Entrepreneur recommends providing a cover page to the financial document section describing the content in detail.

Be sure to include these three financial statements in this section:

• Income statement: Entrepreneur recommends listing your income projections monthly for your first year of business, quarterly for your second year of business and annually after that.
• Cash flow statement: This document is important for investors because it shows how much money is required for your business, where it's going to come from and when it's going to come in.
• Balance sheet: This document summarizes your business' assets, liabilities and equity.

Other Important Elements of Your Business Plan

While these four sections are key to your business plan, it's important to also focus on the other necessary sections. Typically, business plans follow a templated order so that information is provided in a logical format to meet your investors' needs. Be sure to include these sections within your business plan:

• Executive summary
• Mission and vision statement
• Business description and unique value proposition
• Management team biographies
• Market analysis with competitor details and target market segmentation
• Marketing plan
• SWOT analysis (strengths, weaknesses, opportunities, threats)
• Logistics and operations plan
• Financial statements and projections

Some investors or financial institutions may have separate requirements for business plans, so it's important to keep your audience in mind when writing it out. Whenever possible, be sure to provide concrete examples, quantitative information and intricate details. Remember that writing out a business plan is useful for you even if you're not seeking investment or funds, because it will help you clarify your plans and develop market strategies for success.

• U.S. Small Business Administration: 5 Reasons You Need a Business Plan
• Constant Contact: 4 Sections Every Business Plan Must Have (And Why they're Important)
• Entrepreneur: Elements of a Business Plan
• Forbes: 10 Essential Business Plan Components
• The Business Plan Shop: How to Do a Market Analysis for a Business Plan

Anam Ahmed is a Toronto-based writer and editor with over a decade of experience helping small businesses and entrepreneurs reach new heights. She has experience ghostwriting and editing business books, especially those in the "For Dummies" series, in addition to writing and editing web content for the brand. Anam works as a marketing strategist and copywriter, collaborating with everyone from Fortune 500 companies to start-ups, lifestyle bloggers to professional athletes. As a small business owner herself, she is well-versed in what it takes to run and market a small business. Anam earned an M.A. from the University of Toronto and a B.A.H. from Queen's University. Learn more at www.anamahmed.ca.

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Parts of a Business Plan

Whether you are starting a pizza shop or a plumbing business, a flower shop or a factory, you need a solid plan. In fact, your Business Plan will be an essential tool throughout the life of your business – from starting out to cashing in. It will help you to start out on the right foot, stay focused, get financing, manage your growth, and more.

Not every Business Plan will be the exactly same, but every Plan should incorporate several key elements.

The Parts of the Plan

Here are the key pieces to a solid Business Plan.

• The title, or heading, of the plan, and very brief description of the business.
• The name of the owner
• The company name and location
• A copyright or confidentiality notice

Table of Contents

• A list of the individual sections and their page numbers, starting with the Title Page and ending with a section for Special Materials (references, etc.).

Summary/Overview

• A brief, but focused statement (a few sentences or paragraphs) stating why the business will be successful. This is the most important piece of a Business Plan because it brings everything together.

Market Analysis

• Identifies specific knowledge about the business and its industry, and the market (or customers) it serves.
• An analysis that identifies and assesses the competition.

Description of the Company

• Information about the nature of the business and the factors that should make it successful .
• Special business skills and talents that provide the business with a competitive advantage, such as a unique ability to satisfy specific customer needs, special methods of delivering a product or service, and so on.

Organization & Management

• The company’s organizational and legal structure, Is it a sole proprietorship? A partnership? A corporation? (See: “ Ownership Structures “)
• Profiles of the ownership and management team: What is their background, experience and responsibilities?

Marketing & Sales

• The company’s process of identifying and creating a customer base. (See: “ Market Research “)

Description of Product or Service

• How they will benefit from the product or service?
• Specific needs or problems that the business can satisfy or solve, focusing especially on areas where the business has the strongest skills or advantages.
• The amount of current and future funding needed to start or expand the business. Includes the time period that each amount will cover, the type of funding for each (i.e., equity, debt), and the proposed or requested repayment terms.
• How the funds will be used: For equipment and materials? Everyday working capital? Paying off debt?
• Explains or projects how the company is expected to perform financially over the next several years. (Sometimes called a “pro-forma projection.”)  Because investors and lenders look closely at this projection as a measure of your company’s growth potential, professional input is strongly recommended.
• Credit histories (personal & business)
• Resumes of key personnel and partners
• Letters of reference
• Details of market studies
• Copies of licenses, permits, patents, leases, contracts, etc.
• A list of business consultants, attorneys, accountants, etc.

These are just the basic essentials to creating a Business Plan. Each plan should be tailored to the specific business. (See: Business Plan Assistance )

Main Street applauds Harris' small business plan as a tax fight looms

Entrepreneurs are cheering Vice President Kamala Harris’ plan to boost small businesses, but advocates say it foreshadows a bigger fight over the tax code.

On Wednesday, Harris unveiled policy proposals that aim to catalyze small business growth and create more slack in their balance sheets by way of several mechanisms. Those include expanding the tax deduction for startup expenses from $5,000 to $50,000, clearing barriers for owners and their employees to obtain or transfer occupational certifications, and launching a fund for community banks to expand entrepreneurs’ access to capital.

“All of that would be beneficial,” said Sherman Kyse, chef and owner of Dem Dam Burgers, a Biloxi, Mississippi-based eatery. 

Yet others in the small business community are looking to next year with concern, measuring how the assumed gains from Harris’ proposal would compare to those lost should the deductions under the tax law signed by former President Donald Trump expire at the end of next year . Whether Harris or Trump wins, they will likely face a tough battle to pass tax code changes through a potentially divided Congress. 

Meanwhile, during a speech on Thursday meant to sharpen his economic policy, Trump again promised to slash tax rates for businesses and corporations.

Richard Trent, executive director of Main Street Alliance, said Harris’ proposal addresses many economic concerns of the organization’s 30,000 membership nationwide, but he’s also looking ahead to 2025.

“It’s just scratching the surface of what we need to do to ensure that local economies and small business owners are protected in an environment where corporate consolidation has made the largest businesses in our country more powerful than ever before,” he said. For example, he wants to see an expansion of cash grants from the Small Business Administration so that entrepreneurs with shallower pockets can be more competitive.

Eager for a boost

For his part, Kyse, who said he plans to vote for Harris, said the extra money from the startup deduction could help support payroll, better food distributor contracts and warehouse space, a $70-per-month expense he’s so far avoided.

“My pops’ shed is completely filled with restaurant equipment,” he added. 

His business has faced some tough choices of late. Despite ranking second in a major local newspaper for best burger on the coast, Kyse, 43, said grocery inflation and price-cautious patrons have forced him to whittle down both his restaurant and its menu items, which include pastas and seafood nachos. Since 2020, he’s closed three locations across Mississippi’s Gulf Coast stretch. 

Revenue for 2024 stands at about $257,000, he said, down from $360,000 this time last year.

“I’m in the process of restructuring my menu to let them see the cheaper stuff on the value side,” said Kyse, who said it is his 30th menu revamp. For the most recent version — after hearing feedback that some items were too expensive — he went so far as to copy Five Guys’ menu pricing, “and nobody said nothing.”

With two months until her Election Day showdown with Trump, Harris is racing to produce more details for her economic agenda. Her small business proposals follow plans to build millions of new homes and a pledge to crack down on grocery price-gouging. 

Rhett Buttle, founder and CEO of Public Private Strategies — and former economic adviser to both President Joe Biden and Harris — said the proposal shows Harris’ “deep commitment” to entrepreneurs. He also said it was a clear overture to red states as well, noting her promise to expand the State Small Business Credit Initiative, which was built out with funding from Biden's American Rescue Plan and which “Republican governors love,” he added.

“There are broad strokes here to people from all walks of life,” he said. “Small business and entrepreneurship tends to be a great unifier in a world where people have starkly different political divisions.”

Deficits and deductions

If Harris wins, it will be important for the many in the business community to see how her agenda jibes with parts of the tax code that owners and entrepreneurs already favor, including provisions made law under Trump.

Brad Close, president of the National Federation of Independent Businesses, noted the popularity among business owners of Trump’s 2017 law that allows them to deduct 20% of their qualified business income when calculating their taxes. “If the deduction is allowed to expire at the end of next year, millions of small businesses will face a massive tax hike,” he said.

The so-called pass-through deduction has been criticized as one of the most expensive parts of the tax code, with initial estimates projecting a deficit of $414.5 billion across a decade, according to the Joint Committee on Taxation. Last month, the nonpartisan Penn Wharton Budget Model said Trump's overall proposals would increase deficits five times more than Harris' would .

Harris’ small business plan is the latest example of the fine economic line she’s had to walk since her ascendancy to top of the ticket — appealing to a broad swath of moderate voters using populist policies aimed at taxing the richest Americans to spur wealth generation among the poorest.

Charlotte Chaze, 33, doesn’t need much convincing. She already plans to vote for Harris, and the recent proposal includes a number of financial wins for her two-year-old company, Break Into Tech, which sells video courses for professionals to become certified in data analytics. 

A bigger tax deduction would help Chaze expand her staff beyond her current four employees. And she cheers Harris’ plan to levy a 28% tax on long-term capital gains — lower than Biden’s 39.6% proposal but still more than the current 20%.

“As a small business owner who is super successful but doesn’t make enough for the capital gains policy to affect me or my business, that policy will help transfer wealth away from people who have more than they could ever spend, meaning more people will be able to afford my product,” said Chaze, who added that she has resisted raising prices alongside competitors. “It’s just good karma to believe in people over profits.”

J.J. McCorvey is a business and economy reporter for NBC News.

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Identifying Risks

Physical risks, location risks, human risks, technology risks, strategic risks, making a risk assessment, insuring against risks, risk prevention, the bottom line.

• Business Essentials

Identifying and Managing Business Risks

Running a business comes with many types of risk. Some of these potential hazards can destroy a business, while others can cause serious damage that is costly and time-consuming to repair. Despite the risks implicit in doing business, CEOs and risk management officers can anticipate and prepare, regardless of the size of their business.

Key Takeaways

• Some risks have the potential to destroy a business or at least cause serious damage that can be costly to repair.
• Organizations should identify which risks pose a threat to their operations.
• Potential threats include location hazards such as fires and storm damage, a l cohol and drug abuse among personnel, technology risks such as power outages, and strategic risks such as investment in research and development.
• A risk management consultant can recommend a strategy including staff training, safety checks, equipment and space maintenance, and necessary insurance policies.

If and when a risk becomes a reality, a well-prepared business can minimize the impact on earnings, lost time and productivity, and negative impact on customers. For startups and established businesses, the ability to identify risks is a key part of strategic business planning . Risks are identified through a number of ways. Strategies to identify these risks rely on comprehensively analyzing a company's specific business activities. Most organizations face preventable, strategic and external threats that can be managed through acceptance, transfer, reduction, or elimination.

A risk management consultant can help a business determine which risks should be covered by insurance.

Below are the main types of risks that companies face:

Building risks are the most common type of physical risk. Think fires or explosions. To manage building risk, and the risk to employees, it is important that organizations do the following:

• Make sure all employees know the exact street address of the building to give to a 911 operator in case of emergency.
• Make sure all employees know the location of all exits.
• Install fire alarms and smoke detectors.
• Install a sprinkler system to provide additional protection to the physical plant, equipment, documents and, of course, personnel.
• Inform all employees that in the event of emergency their personal safety takes priority over everything else. Employees should be instructed to leave the building and abandon all work-associated documents, equipment and/or products.

Hazardous material risk is present where spills or accidents are possible. The risk from hazardous materials can include:

• Toxic fumes
• Toxic dust or filings
• Poisonous liquids or waste

Fire department hazardous material units are prepared to handle these types of disasters. People who work with these materials, however, should be properly equipped and trained to handle them safely.

Organizations should create a plan to handle the immediate effects of these risks. Government agencies and local fire departments provide information to prevent these accidents. Such agencies can also provide advice on how to control them and minimize their damage if they occur.

Among the location hazards facing a business are nearby fires, storm damage, floods, hurricanes or tornados, earthquakes, and other natural disasters. Employees should be familiar with the streets leading in and out of the neighborhood on all sides of the place of business. Individuals should keep sufficient fuel in their vehicles to drive out of and away from the area. Liability or property and casualty insurance are often used to transfer the financial burden of location risks to a third-party or a business insurance company.

There are other business risks associated with location that are not directly related to hazards, such as city planning. For example, a gas station exists on a major road, and as a result of its location, it receives plenty of business. City planning can eventually restructure the area around the gas station. The city may close the road the gas station is on, build other infrastructure that would make the gas station inaccessible, or overall just not take the gas station into consideration with any redevelopment. This would leave the gas station with no traffic to serve.

Alcohol and drug abuse are major risks to personnel in the workforce. Employees suffering from alcohol or drug abuse should be urged to seek treatment, counseling, and rehabilitation if necessary. Some insurance policies may provide partial coverage for the cost of treatment.

Protection against embezzlement , theft and fraud may be difficult, but these are common crimes in the workplace. A system of double-signature requirements for checks, invoices, and payables verification can help prevent embezzlement and fraud. Stringent accounting procedures may discover embezzlement or fraud. A thorough background check before hiring personnel can uncover previous offenses in an applicant's past. While this may not be grounds for refusing to hire an applicant, it would help HR to avoid placing a new hire in a critical position where the employee is open to temptation.

Illness or injury among the workforce is a potential problem. To prevent loss of productivity, assign and train backup personnel to handle the work of critical employees when they are absent due to a health-related concern. Other human-related risks under public attention could be associated with their behaviors and values. Misbehavior of management related to bias, racism, sexism, harassment, corruption, discrimination, pollutive actions, and carelessness about the environment are all actions that represent risk for the companies where these managers work.

A power outage is perhaps the most common technology risk. Auxiliary gas-driven power generators are a reliable back-up system to provide electricity for lighting and other functions. Manufacturing plants use several large auxiliary generators to keep a factory operational until utility power is restored.

Computers may be kept up and running with high-performance back-up batteries. Power surges may occur during a lightning storm (or randomly), so organizations should furnish critical business systems with surge-protection devices to avoid the loss of documents and the destruction of equipment.

Cloud storage is another source of risks nowadays. The process involves backing up data with Amazon Web Services, for example, using Azure, IBM, and Oracle, for instance. This is a huge undertaking that should be considered given the reliance on cloud-based data to run most businesses now. It is important to establish both offline and online data backup systems to protect critical documents.

Although telephone and communications failure are relatively uncommon, risk managers may consider providing emergency-use company cell phones to personnel whose use of the phone or internet is critical to their business.

Strategy risks are not altogether undesirable. Financial institutions such as banks or credit unions take on strategy risk when lending to consumers, while pharmaceutical companies are exposed to strategy risk through  research and development  for a new drug. Each of these strategy-related risks is inherent in an organization's business objectives. When structured efficiently, the acceptance of strategy risks can create highly profitable operations.

Companies exposed to substantial strategy risk can mitigate the potential for negative consequences by creating and maintaining infrastructures that support high-risk projects. A system established to control the financial hardship that occurs when a risky venture fails often includes diversification of current projects, healthy cash flow, or the ability to finance new projects in an affordable way, and a comprehensive process to review and analyze potential ventures based on future return on investment .

After the risks have been identified , they must be prioritized in accordance with an assessment of their probability. The first step is to establish a probability scale for the purposes of risk assessment .

For example, risks may:

• Be very likely to occur
• Have some chance of occurring
• Have a small chance of occurring
• Have very little chance of occurring

Other risks must be prioritized and managed in accordance with their likelihood of occurring. Actuarial tables —statistical analysis of the probability of any risk occurring and the potential financial damage ensuing from the occurrence of those risks—may be accessed online and can provide guidance in prioritizing risk.

Insurance is a principle safeguard in managing risk, and many risks are insurable. Fire insurance is a necessity for any business that occupies a physical space, whether owned outright or rented, and should be a top priority. Product liability insurance, as an obvious example, is not necessary for a service business.

Some risks are an inarguably high priority, for example, the risk of fraud or embezzlement where employees handle money or perform accounting duties in accounts payable and receivable. Specialized insurance companies will underwrite a cash bond to provide financial coverage in the event of embezzlement, theft or fraud.

When insuring against potential risks, never assume a best-case scenario. Even if employees have worked for years with no problems and their service has been exemplary, insurance against employee error may be a necessity. The extent of insurance coverage against injury will depend on the nature of your business. A heavy manufacturing plant will, of course, require more extensive coverage for employees. Product liability insurance is also a necessity in this context.

If a business relies heavily on computerized data—customer lists and accounting data, for example—exterior backup and insurance coverage is necessary. Finally, hiring a risk management consultant may be a prudent step in the prevention and management of risks.

The best risk insurance is prevention. Preventing the many risks from occurring in your business is best achieved through employee training, background checks, safety checks, equipment maintenance and maintenance of the physical premises. A single, accountable staff member with managerial authority should be appointed to handle risk management responsibilities. A risk management committee may also be formed with members assigned specific tasks with a requirement to report to the risk manager.

The risk manager, in conjunction with a committee, should formulate plans for emergency situations such as:

• Hazardous materials accidents or the occurrence of other emergencies

Employees must know what to do and where to exit the building or office space in an emergency. A plan for the safety inspection of the physical premises and equipment should be developed and implemented regularly including the training and education of personnel when necessary. A periodic, stringent review of all potential risks should be conducted. Any problems should be immediately addressed. Insurance coverage should also be periodically reviewed and upgraded or downgraded as needed.

Prevention is the best insurance against risk. Employee training, background checks, safety checks, equipment maintenance, and maintenance of physical premises are all crucial risk management strategies for any business.

While business risks abound and their consequences can be destructive, there are ways and means to ensure against them, to prevent them, and to minimize their damage, if and when they occur. Finally, hiring a risk management consultant may be a worthwhile step in the prevention and management of risks.

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​Hello Customers and Enthusiasts, (open letter)

Sep 6th 2024

There is an incident reported last night on social media which shows a Talaria MX5 that allegedly was involved in a battery fire. This is the first major Talaria fire, of any model, reported in the USA which we take this very seriously, and plan to address this concern with the utmost priority. Since the start, Talaria has used Greenway Batteries, a battery factory in China that is responsible for making most of the ebike batteries in the USA. Luna is very familiar with Greenway since they also made all the Surron Lightbee LBX packs (Luna was the exclusive USA Surron distributor for 6 years) and for 8 years Luna has been selling, supporting and also repairing these packs (we are one of the few Greenway service centers in USA). In those 8 years we have not seen a Greenway pack cause a fire and it is a big reason Surron and Talaria products have been so safe. Luna has sold bikes containing Greenway packs to 10s of thousands of customers without incident. We have built tremendous confidence in both Talaria and Greenway over our years of partnership, largely due to their stellar reliability and safety. They sometimes fail non-catastrophically, like almost any battery operated device, and we repair typically without issues. They have always been rock solid when it comes to safety and longevity. In fact the CEO of Greenway visited Luna and visited our tiny battery factory and repair facility and we hit it off… We love Greenway and feel confident selling Talarias containing their proven battery. 

Some of the first Talaria MX5s arriving in the usa were made by a different China battery company called Scud (what a name) due to a clerical error made by the Talaria team, despite Luna requesting ONLY Greenway batteries in their MX5 order. We cannot speak to Scud’s overall reliability, but Scud is supposedly a reputable battery brand in China with even Surron now using them in some of their newer bikes. After investigating the incident and the bike involved in this fire, Luna verified the MX5 that caught fire last night unfortunately had a Scud battery installed in it from Talaria. We are not sure of the cause of this fire and would prefer not to speculate at the possible causes, whether faulty or due to external factors. Regardless of the cause, Luna stands behind every bike and product it sells, and this incident is unacceptable for both Luna, and our customers. 

This is what Luna is doing to fix this, at NO CHARGE to the customer: 

Luna will be replacing all the MX5 “Scud” packs which have already been sold or delivered with the Greenway batteries which we know are proven safe. 

Just tonight we reversed all shipments on all MX5s containing the Scud pack. If you have a bike on order and you see your Fed-Ex tracking suddenly reversing direction, that is the reason why. On Monday we will be reshipping all bikes that had been reversed, and you will have your bike on the way early next week. Due to the inconvenience, we will be throwing in a care package containing some extra upgrade parts to make up for the delay in shipping (including riser bars, float seat etc) which will provide you with a better value… we hope to limit the delay in shipping time, only increasing by a few days in many instances. Again, all bikes we just reversed shipment on will ship out this monday containing the Greenway pack and some free upgrade parts. We are so sorry for the delay! 

If you already ordered a bike and your shipment is on the way and did not reverse today… this means you have a Greenway pack coming with your new bike and you are good to go with nothing to worry about. 

All MX5’s sent out in the future from Luna will be verified to contain the Greenway pack.

I will post pictures how you can identify your pack to make sure it is a greenway pack. All packs are labeled either Greenway or Scud so it’s easy to identify. Recommendation for Scud-verified pack owners: Due to the unknown reliability and safety particularly due to this defect we have now seen, we strongly recommend you DO NOT use this battery until a replacement has been received. We DO NOT advise riding or even charging any Scud-equipped Talaria’s, especially indoors. For the very few customers who already received the MX5s containing the Scud pack, we will be reaching out to you to replace your pack with the Greenway pack. If you identify your pack on your new mx5 as a scud pack and you have not heard from us by Monday afternoon please reach out to us at [email protected]. 

We will also be reaching out to customers individually who have already received a bike, to make sure we resolve this. 

I have decided to make this statement public and not just reach out privately to our customers. Ebikes are all inherently dangerous when it comes to battery fire risk and it’s always best to be cautious and take the safest possible approach to Ebike batteries both as consumers and business owners. I hope by doing the right thing by issuing this mini recall, Luna will help set the right example. It is always better to be safe than sorry. 

I am really sorry to our early adopter customers this has happened and I am going to do everything it takes to make sure that all bikes we sell are as safe as they can be, and we will always do whatever it takes to make it right. I will work together with Talaria to make sure the MX5 along with the rest of the Talaria line up are the safest bikes in their class. Thank you for your patience and understanding. 

ERIC HICKS 

MAIN FUSE 

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