How to Write a Business Plan

The Purpose of a Business Plan

Whether you are starting a new business, seeking financing to expand your business, or even selling your business, a business plan will prove essential in the process. The purpose of a business plan is to define the course of the business over a certain period of time. The plan should show what the objectives of the business are, and how the business will be operated to achieve those objectives. If the business is new and the business plan is written in support of the start-up, then the plan will establish standards of performance and business objectives. If the purpose is to obtain new financing, then the plan will be essentially like an autobiography, describing business history, laying out its operational scheme, and detailing the results of operations. If a business plan is written in support of an effort to sell the business, then it will serve as an introduction to the business to potential buyers, and explain all details of operations so as to allow buyers to assess their own ability to assume control of the business and take over its operations.

The particular order of contents in a business plan is probably unimportant, so long as it contains all of the necessary details concerning company operations. A typical business plan will include the following components, in whatever order they might appear.

Mission Statement

The first such component is the mission statement. One might think of the mission statement as almost approaching a confessional in tone. It is the business operator's statement of who we are, what we are doing, and why. In fact, it is a firm statement of vision and purpose. With it, the purpose of the business is defined, and the remainder of the plan is viewed in light of it. The mission statement forms an introduction to the business plan, summing up the purpose of the business in a few short words.

Executive Summary

Probably next will be the executive summary. This normally does follow the mission statement in order. The executive summary is contained in just a page or two, and its purpose is to summarize the plan, with short sections describing each individual part of the plan. Readers will probably expect to see sections devoted to the company, the product, the market, the management team, and financial results. Readers will peruse the executive summary, and then proceed onto the full plan.

The Company

Follow the executive summary with a company description, including legal form, date of inception, and form of ownership. You might include here a "milestones table," which lists key dates in company history. This will help the reader to gain a quick perspective of the company as an ongoing operation.

The Product

The next section is a description of product or products. Describe in detail exactly what the company is offering for sale. Include in this section plans and strategies for sale, along with dates for implementation.

Management Team

 You will also need a section concerning the management team. Who runs the company and how are they qualified to do so?

Financial Details

Finally, and this will probably be last in order, comes the bottom line: the financial details. Profit, loss, and cash flow, real or projected. If they are projected, then there must be clear operational support for the numbers. How will the business get there? Make that clear.

For instance, the executive summary is presented first, but really should be written last after all the details are known. Also, there are many sample business plans available, on the Internet and elsewhere, but you might be advised to avoid them. Don't attempt to fit your business plan into any sample plan as you would with a template. Your business plan is the plan for your business and your business alone. Your business is unique, with unique details and unique challenges. The plan will analyze your business in detail, and it will not duplicate any other plan on the face of the earth.

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