Outline of a Business Plan

What are the key components of a business plan

Or restated, what is a solid outline for a business plan? To begin with, you're going to start with an executive summary

This is a general summary of the entire plan. So if someone only had the ability to read a very small portion

one, two, maybe three, but generally one or two paragraphs, to learn as much as they could about the business overall

then this is the executive summary, and this is how you're going to start the business plan

I will say that oftentimes you create the executive summary at the end

after you've created the entire plan and have included everything that you wish in the plan

After that, you'll begin with a general summary of the business's value proposition

What does it do? What value does it deliver to customer, clients, or end users

Why is that a value proposition to someone? What is the need or want that's being answered there

Next, you'll move on to the company's mission, vision, value statements, and its goal statements

Basically, you're trying to outline what the company stands for, where it sees itself going in the future

What are the guiding underlying principles, the motivations that it's going for

And maybe even provide some more specific goals or objectives that the company hopes to achieve or accomplish along its path

So if the vision is growth and market dominance and all of these things, what are some objectives there

Is it enter with 10 different product lines in the market? Is it consolidate and have a single product line that expounds and improves over time

that type of thing. Okay, market ysis. What's the size of the market? What's the general customer

priority for your different market segments that you are able to identify? Which of those segments

are you primarily targeting and which are secondary and tertiary market segments? Use as much detail

as possible to define who is your customer Why are they your customer What are their characteristics that make them want or relate to the value proposition that you offering

You will even put in information about how you plan to reach them, how you plan to make

them aware of your product or service, how you plan to consummate or carry out the sales

process to them in that way. All of this goes into the marketing ysis and ultimately your marketing plan

Competitive ysis. The competitive ysis identifies and examines others in the market that are offering a similar

or the same value proposition to customers or clients that could also potentially be

your customers or clients. So who are your competitors? What are the substitute products

What are the direct competitive products? Also look at things like suppliers, buyers, or the distribution channel

If these are key players as part of the value delivery process, is there competition not only for what you're delivering and for the customers out there

but for the resources that you need to supply that good or service to the populace

And how do you get it to the customers or clients? Is there some bottleneck in the distribution channel or key distributors that you need to go through and things like this

This is where you're going to examine the competitive forces. Porter's Five Forces is a very important competitive model to include in this portion

Okay. The marketing plan. I spoke earlier about the market ysis, what you're trying to identify about your customers, their size, their priorities, things like that

You will translate that into the marketing plan, which is all of the marketing mix, the product, the price, the placement, the promotion

If you expand those into other things like people, physical evidence, packaging, all the P's that you've heard of that come into the marketing mix

This is where you going to lay these out in as much detail as possible to help whoever reading the business plan really understand what means or method you are going to use to meet the needs or wants of your customers

Operational plan. What are the procedural steps that must happen or take place in order to deliver value and to receive back value from your customers or clients

This can be very granular in nature and should be broken down by the various categories of functions that need to be carried out

And it should identify those who will be charged with carrying out those functions, when, where, how, why, etc

Management and organizational structure. How will your overall entity be organized? How will you divide out all of those operational tasks and functions that need to be carried out as part of the business operations process

Who will be accountable for these various functions and the ultimate output of the people that they're managing to carry out these functions

So, again, this will lay out things such as what are the tiers of reporting all the way up to the top

Who are the owners of the company? Who is on the board of directors

who initially are shareholders, which is very important in startup ventures, which generally

the shareholders, executives, employees are all the same people until you start bringing in outside

investors. But originally, who is the management structure and how is all of that organized

And then lastly, financial projections. Your financial projections generally project what your startup cost will be, what your fixed and variable costs will

be based upon operations over a period of time. Generally you break down the

projections month-by-month for the first year, quarter-by-quarter for the second year, and then just generally the third year. The reason because the further out

you go the more speculative it becomes in nature. So you can't be as exact. So

And once you've laid out all of these cost drivers, you will then be able to project

revenue That is what sales do you attribute to a certain amount of effort So in identifying the effort and the cost that go into it you will correlate that with

some level of new customer acquisition, new sales, new users, that type of thing, whatever

your business model is and you attribute that to an amount of revenue commensurate with

the level of operational activity and thus the cost that you are occurring throughout

So you'll do the same thing. You identify all the revenue that you expect over a given period of time

As part of those financial projections, you'll show at what point you believe you will reach

break even and what you see as being the profitability curve after that

And then you'll state where you believe you will get your financing

Where's the money going to come from to cover all of the startup costs and all of the shortfalls

in revenue to cover all of the costs initially until you reach that break-even point, until you

reach profitability. If you want to do a bit of further ysis, particularly if you're trying to

entice investors with a particular rate of return or potential rate of return in the future

you'll do a net present value or internal rate of return calculation there as well based upon

your projections and when you believe the company will either become profitable or what

its growth metrics will look like and based upon the revenue or users generated, what

that translates into in terms of value in the market if the company were to be sold

So all of this is generally part of your financial projections portion

And then really lastly, if you have anything to append such as marketing material, additional

research that you've gathered on the business, the market, things like that, intellectual

property transfers, things of that nature, patent filings, any of these things that would

be relevant to the planning process can be appended to the end of the business plan

Not every business plan will need to append things. Much of the information will be contained internally

But in summary, these are all the portions that should be included in a thoroughly laid

and developed business plan