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What's The Plan?

Parts of a Business Plan

Executive Summary

This brief overview of the business is a synopsis of your entire business plan. State the business concept, basic financial points (such as sales projections and capital requirements) and current status of the company. Identify the owners, key personnel and what each brings to the table. For example, you may have previous industry experience, or maybe you've hired someone with a notable track record or connections. Finally, state what your company has achieved so far. Even a start-up can list things like patents, prototypes, contracts and test-marketing results.

Business Description

First, look at the entire industry and the markets it serves. Then describe your company, including operating structure (retail, wholesale, manufacturing or service provider, for example), legal form (sole proprietorship, partnership, corporation or limited liability company), customer base, products or services, and distribution methods. Emphasize what sets you apart from competitors and others in the industry.

Market Strategies

Define the total market in terms of size, structure, growth prospects, trends and sales potential. Then estimate what you realistically expect your market share to be and how you will capture it. Outline how you'll position your company and product in the market, how you'll set prices, how you'll promote your product, how you'll distribute it, and the roles these things will play in your marketing efforts. You could use this section to develop your marketing strategy, or you could develop a separate marketing plan and just refer to it here. Either way, you need a comprehensive marketing plan that includes such elements as sales, advertising, public relations, special promotions and community activities. The plan should outline what you intend to do, assign a budget and a schedule to the various activities, and include a review process so you can evaluate your efforts and make adjustments.

Competitive Analysis

Identify current and potential competitors and analyze their strengths and weaknesses. Understand the reasons behind their successes and failures so you can fine-tune your own marketing approach. Be specific, detailed and brutally honest; don't let unrealistic optimism, personal bias or wishful thinking affect your view of the competition.

Design and Development Plans

Describe the design of your product and how it will be developed within the context of production and marketing. If your company is built on a new product you've invented, include a plan for testing, incremental reviews and a thorough final evaluation. Be sure your budget includes materials, labor, overhead, equipment, professional services and administrative costs.

Operations and Management Plans

Demonstrate how your business will function day to day. Who is responsible for what, how will their duties be carried out, and what are your capital and expense needs? Show that you have enough resources (facilities, equipment, materials and labor) to operate as planned.

Financial Components

This is the backbone of your plan and should include an income statement, a cash-flow statement and a balance sheet. These reports show a historical perspective, a forecast for the future and your current financial situation.

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This article was originally published in the March 2000 print edition of Entrepreneur with the headline: What's The Plan?.

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